ZuoTi.Pro
Question

Fledgling Electronics is forecasted to pay a $5.00 dividend at the end of year one and...

Fledgling Electronics is forecasted to pay a $5.00 dividend at the end of year one and a $5.50 dividend at the end of year two. At the end of the second year the stock will be sold for $121. If the discount rate is 15%, what is the price of the stock? (using BA II Plus)

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

To find the price through BA II Plus, we need to put the following values in the financial calculator:

CF0 = 0; C01 = 5; F01 = 1; C02 = 5.50 + 121 = 126.50; F02 = 1;

Press NPV, then Put I = 15; Press Down Key, then CPT, then gives us 100

So, Current Stock Price = $100

0 0
Add a comment
Know the answer?
Add Answer to:
Fledgling Electronics is forecasted to pay a $5.00 dividend at the end of year one and...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 33. A firm will pay a dividend of $0 one year from today and $5.00 two...

    33. A firm will pay a dividend of $0 one year from today and $5.00 two years from today (that is, D S0 and D 5.00). Thereafter, the dividend is expected to grow at a constant rate forever. The price of this stock today is $100 and the required rate of retun on the stock is 10%. What is the expected constant growth rate of the dividend stream from year 2 to infinity?

  • 15) Lunar Adventures Inc is expected to pay a dividend of $1.40 per share at the end of this year and expected to pay a...

    15) Lunar Adventures Inc is expected to pay a dividend of $1.40 per share at the end of this year and expected to pay a dividend of $1.50 per share at the end of the second year. As well, you expect the stock price to be $25.00 at the end of the second year. If the firm's equity cost of capital is 10% and you plan to hold the stock for one year, the price you would expect to be...

  • Suppose Disney Inc. is expected to pay a $5 dividend in one year. If the dividend...

    Suppose Disney Inc. is expected to pay a $5 dividend in one year. If the dividend is expected to grow at 8% per year and the required return is 12%, what is the price? Versace Company is expected to pay a dividend of $5 next period and dividends are expected to grow at 6% per year. The required return is 15%.  What is the current price? Babe Clothing Company is expected to pay a dividend of $5 next period and dividends...

  • A stock is expected to pay a dividend of $1.50 at the end of the year...

    A stock is expected to pay a dividend of $1.50 at the end of the year (.e., Di = $1.50), and it should continue to grow at a constant rate of 3% a year. If its required return is 15%, what is the stock's expected price 1 year from today? Do not round intermediate calculations. Round your answer to the nearest cent. Tresnan Brothers is expected to pay a $2.20 per share dividend at the end of the year (I.e.,...

  • Oxxon Furniture is expected to pay a dividend of D1 = $1.25 per share at the...

    Oxxon Furniture is expected to pay a dividend of D1 = $1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is Oxxon's current stock price? $21.62 $23.45 $25.12 $28.90 $31.90

  • A company expects to pay a dividend of $3.50 per share one year from today. The...

    A company expects to pay a dividend of $3.50 per share one year from today. The dividend is expected to grow at 25 percent per year for two years. Thereafter, the dividend will grow at 4 percent per year in perpetuity. If the appropriate discount rate is equal to 12 percent, what is the price of the company's stock today?

  • A stock is expected to pay a dividend of $1.00 at the end of the year...

    A stock is expected to pay a dividend of $1.00 at the end of the year (i.e., D1 = $1.00), and it should continue to grow at a constant rate of 5% a year. If its required return is 13%, what is the stock's expected price 1 year from today? Do not round intermediate calculations. Round your answer to the nearest cent. $   ___________________________________________________________________________________-- Holtzman Clothiers's stock currently sells for $39.00 a share. It just paid a dividend of $1.00...

  • Cha Cha, Inc. will pay a $5 dividend one year from now and a $5.10 dividend...

    Cha Cha, Inc. will pay a $5 dividend one year from now and a $5.10 dividend two years from now. The stock will be sold in two years for an estimated price of $32. If the required rate of return is 8%, which of the following values is closest to the stock's price?

  • A stock is expected to pay a dividend of $1 at the end of the year....

    A stock is expected to pay a dividend of $1 at the end of the year. The required rate of return is r s = 10%, and the expected constant growth rate is 5%. What is the current stock price?

  • A stock is expected to pay a dividend of $0.75 at the end of the year...

    A stock is expected to pay a dividend of $0.75 at the end of the year (i.e., D1 = $0.75), and it should continue to grow at a constant rate of 3% a year. If its required return is 15%, what is the stock's expected price 1 year from today? Do not round intermediate calculations. Round your answer to the nearest cent.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT