Purchase Solution

Share Price

Not what you're looking for?

Ask Custom Question

Corn Inc. has just paid a dividend of 6$ per share and has announced that it will increase the dividend by $2 per share for each of the next four years, and then never pay another dividend. If you require an 11% return on the company's stock how much will you pay for a share today?

Purchase this Solution
Solution Summary

The solution clearly explains the steps that are needed to calculate a share price based on investors required rate of return. The solution also has an attachment that explains the calculations in detail. The solution goes into quite a bit of detail. It is an excellent response for students who want to understand the concepts and then use the same concepts to solve similar problems in the future. Overall, a very good response.

Solution Preview

In years 1-4, the dividends increase by $2. To arrive at the present value for these years, you would just apply the discount factor (1/(1+0.11))^n, where n is ...

Purchase this Solution
Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

View More Free Quizzes
Related BrainMass Solutions

  • Market value ratio

    2009 Earning per share = 1.90 PE(price/earning) = Market price per share/earning per share = 35.79/1.90 = 18.83 Book value per share = stockholder's equity/# of share outstanding = 720,459/227,998 = 3.156 Market to book ratio = Market price

  • XYZ Corporation - Managerial Finance

    Earnings per share = $4 million/963,855 share outstanding = $4.15 per share P/E ratio = Price/Earnings per share 20 = Price/$4.15 Price = $83 The repurchase increase the stock price by $3 per share.

  • Rights Issue

    Rights per share purchased = Ex right price- Subscription Price= $5.00 =$30. - $25.

  • Payout Policy and Capital Structure

    With the Price earnings ratio of 20, the price per share would stay at $200 since the price per share = PE Ratio × EPS = 20 × $10 = $200. The solution examines payout policy and capital structures. The solution examines share price rising.

  • Stock Offerings

    of shares= 15,000 =10000+5000 Therefore share price after issue of new shares= $30.00 =450000/15000 Answer: New share price= $30.00 The expert calculates the price of shares after issue of new shares.

  • Business Valuation Earnings After Tax

    $ 0.45 $ 1.25 $ 1.38 Cash Flow Per share $ 1.34 $ 1.27 $ 1.48 Book Value Per Share $ 28.29 $ 2.69 $ 13.90 Common Stock Price $ 40.06 $ 39.85 $ 15.95 Price-to-Earnings Ratio (Earnings per share / Price

  • M&A evaluation: Purchase price premium, postmerger EPS

    Price paid per share = $50 Current share price for Target Co. - $40 Purchase price premium = (50-40)/40 = 10/40 = 25% (b) Total price paid = 20000*50 = 1,000,000 No. of share issued by Acquirin = 1,000,000/60 = 16,667 Total Share post

  • determining current futures prices

    Forecast share price of Wal-Mart: The trend in share price of Wal-Mart shows that, the price was quite stable over the period.

  • The Carlton Corporation - Stock Price and Tax Advantage

    Compute the current price of the stock. Earnings per share = $4 million/1 million share outstanding = $4 per share P/E ratio = Price/Earnings per share 20 = Price/$4 Price = $80 B.

  • Host Hotels & Resorts Share Price

    252991 Host Hotels & Resorts Share Price Suppose the stock of Host Hotels & Resorts currently trading for $20 per share. a. If Host issued a 20% stock dividend, what will its new share price be? b.

View More Related Solutions