Stock Valuation Models
Not what you're looking for?
1. Adams Company stock paid a dividend of $3.00 from last year, and $3.25 from this year. The increase in the dividend is similar to the long term growth of the company. Considering the risk, your required rate of return from this stick is 14%. Find the price of stock.
2. The current price of Ford stock is $50 a share and it has paid a dividend of $4.00 this year. The required rate of return for Ford shareholders is 16%. What is the expected growth rate of Ford?
3.Moscow Company has paid a constant dividend of $3.00 per share every year, and it expects to do so in the future. If your required rate of return for this investment is 17% ,what should you expect to pay for a share of Moscow stock?
Purchase this Solution
Solution Summary
There are three problems. Solutions to these problems explain the steps to calculate price of stock and expected growth of company.
Solution Preview
Solution is attached as MS Word document also.
Solution:
1.
Long run growth of company=Growth in dividend=g=(3.25-3)/3=8.3333%
D0=Dividend in current year=$3.25
D1=Expected dividend next ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
- "Thank you"
- "Really great step by step solution"
- "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
- "Thanks Again! This is totally a great service!"
- "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
Measures of Central Tendency
Tests knowledge of the three main measures of central tendency, including some simple calculation questions.
Terms and Definitions for Statistics
This quiz covers basic terms and definitions of statistics.
Measures of Central Tendency
This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.
Know Your Statistical Concepts
Each question is a choice-summary multiple choice question that presents you with a statistical concept and then 4 numbered statements. You must decide which (if any) of the numbered statements is/are true as they relate to the statistical concept.