Explore BrainMass
Share

Stock price for Dynegy Stock

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

You believe that the required return on Dynegy stock is 16% and that the expected dividend growth rate is 12%, which is expected to remain constant for the foreseeable future. Is the stock currently overvalued, undervalued, or fairly priced?

a. Overvalued
b. Undervalued
c. Fairly priced
d. Cannot tell without more information

Based on the quote, a good estimate of EPS over the last four quarters is:

a. $0.80
b. $1.21
c. $1.68
d. $1.91
e. $2.54

Etling Inc.'s dividend is expected to grow at 5% for the next 2 years and then at 3% forever. If the current dividend is $2 and the required return is 14%, what is the price of the stock?

a. $19.43
b. $23.82
c. $25.15
d. $27.58
e. $29.70

Suppose the Pale Hose Corp. is expected to pay a dividend next year of $2.25 per share. Both sales and profits for Pale Hose are expected to grow at a rate of 20% for the following 2 years and then at 5% per year thereafter indefinitely. Dividend growth is expected to match sales growth. If the required return is 15%, what is the value of a share of Pale Hose?
a. $22.75
b. $26.00
c. $28.50
d. $32.40
e. $39.25

© BrainMass Inc. brainmass.com October 24, 2018, 7:50 pm ad1c9bdddf
https://brainmass.com/economics/finance/stock-price-dynegy-stock-80585

Attachments

Solution Preview

1. Stock Price = D1/(r-g) = D0*(1+g)/(r-g)
=1.00*(1+12%)/(16%-12%) =28
Overvalued

2. EPS = Market price / PE = ...

Solution Summary

Stock price is determined for Dynegy Stocks. Foreseeable futures constant remains are determined.

$2.19
See Also This Related BrainMass Solution

Statistics: probablitiles, confidence intervals, hyothesis testing for population of stocks

See attached data file.

Using Excel, assume that the distribution of the population of all stocks on that index is normal, and using the mean and standard deviation from your sample as point estimates, find the following probabilities:
P (a price is greater than $20)
P (a price is less than $90)
P (a price is between $30 and $40)

Determine the actual percentage of your sample stocks in Sample "A" that were greater than $20, less than $90, and between $30 and $40 by counting the number. Give reasons why these percentages may differ from those found in Part I above.

Using Sample "A" construct, explain and interpret a 90% confidence interval for the mean of all stocks in your index.
Using Sample "A" construct, explain and interpret a 95% confidence interval for the mean of all stocks in the index based on your sample of 50 stocks.

Conduct a test of the hypothesis that the mean price (current) of the stocks on Sample "A" is the same as the mean price (current) of all of the stocks in Sample "B." Show all five steps.

Discuss the implications of the results of this hypothesis test. In this discussion, reference the current value of each index.

Use the Sample "A" 50 stocks with the current price and the price for one year ago to conduct a paired test to determine if there has been a significant change in these stock values in the last year. Compute the mean change as a percent and compute the mean change in the index for the two dates. Explain your results.

View Full Posting Details