This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: China America Manufacturing has a beta of 1.50, the risk-free rate of interest is currently 12 ... (Read 46 times)

littleanan

  • Hero Member
  • *****
  • Posts: 575
on: Jul 10, 2018
China America Manufacturing has a beta of 1.50, the risk-free rate of interest is currently 12 percent, and the required return on the market portfolio is 18 percent.
 
  The company plans to pay a dividend of 2.45 per share in the coming year and anticipates that its future dividends will increase at an annual rate consistent with that experienced over the 2001-2003 period.
 
  Estimate the value of China America Manufacturing's stock.

Question 2

Even if you are given a present value, a single future value, and a time period, solving for the rate of return, r, is still a trial-and-error process.
 
  Indicate whether the statement is true or false.


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

sabina576

  • Sr. Member
  • ****
  • Posts: 356
Reply #1 on: Jul 10, 2018
Answer to Question 1

ks = 0.12 + 1.50 (0.18 - 0.12 )
= 0.21
Growth rate of dividends:
(2.32/2.10 )1/2-1= 0.0511
P0 = = 15.42

Answer to Question 2

Answer: FALSE
Explanation: r = (FV/PV)1/n - 1


littleanan

  • Member
  • Posts: 575
Reply 2 on: Jul 10, 2018
:D TYSM

CAPTAINAMERICA

  • Member
  • Posts: 325
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

« previous next »
 

Did you know?

Fewer than 10% of babies are born on their exact due dates, 50% are born within 1 week of the due date, and 90% are born within 2 weeks of the date.

Did you know?

Always store hazardous household chemicals in their original containers out of reach of children. These include bleach, paint, strippers and products containing turpentine, garden chemicals, oven cleaners, fondue fuels, nail polish, and nail polish remover.

Did you know?

Certain rare plants containing cyanide include apricot pits and a type of potato called cassava. Fortunately, only chronic or massive ingestion of any of these plants can lead to serious poisoning.

Did you know?

One way to reduce acid reflux is to lose two or three pounds. Most people lose weight in the belly area first when they increase exercise, meaning that heartburn can be reduced quickly by this method.

Did you know?

Thyroid conditions cause a higher risk of fibromyalgia and chronic fatigue syndrome.

Effects of growth rate on development. Effects of growth rate on development.
These species are all at risk of extinction. These species are all at risk of extinction.
Sample Workout in the Target Heart Rate Range Sample Workout in the Target Heart Rate Range
A buildup of beta amyloid plaques and tangled strands of tau protein interferes with neuronal ... A buildup of beta amyloid plaques and tangled strands of tau protein interferes with neuronal ...
The rate of facilitated diffusion The rate of facilitated diffusion
A mother invests $9000 in a bank account at the time of her daughter's birth. The interest is ... A mother invests $9000 in a bank account at the time of her daughter's birth. The interest is ...
Video: How do the different types of chromatography work? (No Audio)

For a complete list of videos, visit our video library