How to calculate current stock price?

Business & Finance
Tutor: None Selected Time limit: 1 Day

1.       A company is forecasted to pay a dividend of $1.35 per share at the end of the year. That dividend is anticipated to grow at a constant rate of 8 percent per year in the future. The risk-free rate of interest is 2 percent. The firm’s beta is 1.73, and the market risk premium is 8.25 percent. The company's current stock price is $17.62.

tThe answer is $17.62 according to intellipath now what is the formula to get the answer?

Jul 22nd, 2015

Thank you for the opportunity to help you with your question!

dividends per share=1.35 and increase in the future=8%

thus 1.35*108%

1.35*108/100=1.458

risk free rate of interest is 2%

1.458*98/100=1.429


firm's beta is 1.73 market is 8.25 current stock is 17.62


Please let me know if you need any clarification. I'm always happy to answer your questions.
Jul 22nd, 2015

Where the 108 comes from

Jul 22nd, 2015

increase in 8% and am lost please

Jul 22nd, 2015

ok

Jul 22nd, 2015

A firm’s end-of-year free cash flow is anticipated to be $14 million. The company’s free cash flows are expected to grow 15 percent a year forever. The firm’s weighted average cost of capital is 18 percent, and the firm has 20 million common stock outstanding shares. The firm has no long-term debt in its capital structure. If the firm has $15 million in preferred stock, the firm’s estimated intrinsic value of its common stock per share is $​______ Do you have formulas for excel?

Jul 24th, 2015

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Jul 22nd, 2015
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Jul 22nd, 2015
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