Explore BrainMass
Share

# Stock Price Valuation: ABC Company

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

ABC Company has the following data:

Current stock price = \$10
Last Dividend paid = \$0.5
Required rate of return = 10 %

Assume that dividend is expected to grow at a constant rate, g, in the future.
Assume that the company has a strong financial conditions and it is classified with low risk.
Assume rs is expected to remain at 10%, after 5 years from now.

Find the stock price for ABC Company?

https://brainmass.com/economics/finance/stock-price-valuation-abc-company-302561

#### Solution Preview

First we need to determine the growth rate:
10 = .5(1+g)/(.1-g)
=> 1 - 10g = .5 + 0.5g
=> 10.5g = 0.5
=> g = 4.76%

Now in order to ...

#### Solution Summary

The solution goes into a great amount of detail related to the stock price valuation question being asked. The solution is very easy to follow along and can be easily understood by anyone with a basic understanding of the concepts. The solution answers all the question(s) being asked in a succinct way. Overall, an excellent response.

\$2.19