DCF Stock Pricing problems

DCF Stock Pricing problems - DISCOUNTED CASH FLOW MODEL...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
DISCOUNTED CASH FLOW MODEL PROBLEMS 1. You bought a share of IBM stock today for $135. You expect to receive a dividend of $9.25 at the end of one year, based on the assumed constant growth rate, and you expect a total return of 16.5% for this stock. Given this information, what is your estimate of the long-term growth rate for this stock? 2. Assume you are buying a share of XYZ stock today. The expected dividend one from today is $1.35 and the stock price is current $22.35. The stock dividends exhibit constant growth of 9.3% and that is expected to continue. Based on this information, what is the expected rate of return for XYZ stock? 3. The expected dividend one year from now on Statesboro Power and Light common shares is $4.00 and the expected growth rate of the stock is 10 percent. If you require a rate of return of 16 percent, what is the highest price you should be willing to pay for this stock? 4. The ACTUAL DIVIDEND just paid on ABC Inc. shares was $1.80 and the expected
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/22/2010 for the course BADM 321 taught by Professor Barth during the Spring '10 term at Texas A&M.

Page1 / 3

DCF Stock Pricing problems - DISCOUNTED CASH FLOW MODEL...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online