FIN419 Week 4 University of Phoenix Company Stock Valuation

Anonymous
timer Asked: Feb 5th, 2019
account_balance_wallet $9.99

Question Description

Purpose of Assignment

The purpose of this assignment is to allow students the opportunity to practice stock valuation problems and to locate financial information on the Internet, which can be used to expand their knowledge of how stocks behave.

Assignment Steps

Resources: Stock Valuation Template

Calculate the following stock valuation problems:

  • Company X is paying an annual dividend of $1.35 and has decided to pay the same amount forever. How much should you pay for the stock, if you want to earn an annual rate of return of 9.5% on this investment?
  • You want to purchase common stock of Company X and hold it for 7 years. The company just announced they will be paying an annual cash dividend of $6.00 per share for the next 9 years. How much should you pay for the stock, if you will be able to sell the stock for $28 at the end of seven years and you want to earn an annual rate of return of 11% on this investment?

NOTE:

Use attached excel file to calculate the problems and show all the work in a word document as well explaining the steps and the formula used to solve these 2 problems.

Unformatted Attachment Preview

Instructions 1. You have two problems - one on each tab of this Excel file. 2. Please show your work in the cells. Use Excel formulas instead of writing the values/answers directly in the cell. The instructor will then know where you made a mistake and provide you valuable feedback and partial credit (if Total Points: 8 e feedback and partial credit (if appropriate). Company X is paying an annual dividend of $1.35 and has decided to pay the same amount forever. How much shou Dividend Rate of Return $ 1.35 0.095 Answer: mount forever. How much should you pay for the stock, if you want to earn an annual rate of return of 9.5% on this investment? n of 9.5% on this investment? You want to purchase common stock of Company X and hold it for 7 years. The company just announced that they w How much should you pay for the stock, if you will be able to sell the stock for $28 at the end of seven years and you Future Price Dividend Rate of Return (r) Number of years (n) PRICE = ANSWER = $ $ 28.00 6.00 0.11 9 $ 28.00 x 0.434 + $ 6.00 x 5.146 Refer to the Solved Example 1 on Page 182 of your text. =B4 FORMULAS =(1/(1+B6)^(B7-1)) =B5 =(1-D11)/B6 announced that they will be paying an annual cash dividend of $6.00 per share for the next 9 years. ...
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Tutor Answer

whgrab
School: Purdue University

the calculation of formula of price in 18th and 25th row was incorrect in excel sheet, made necessary changescheck this and let me know if you need any help

Instructions
1. You have two problems - one on each tab of this Excel file.
2. Please show your work in the cells. Use Excel formulas instead of writing the values/answers directly in the cell.
The instructor will then know where you made a mistake and provide you valuable feedback and partial credit (if
Total Points: 8

e feedback and partial...

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Review

Anonymous
awesome work thanks

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