https://proficientwritershub.com/wp-content/uploads/2022/01/onlinelogomaker-012722-1716-5353-2000-transparent-300x61.png 0 0 James Anderson https://proficientwritershub.com/wp-content/uploads/2022/01/onlinelogomaker-012722-1716-5353-2000-transparent-300x61.png James Anderson2022-06-05 11:39:022022-06-05 11:39:54Calculate the value of the stock today.
Calculate the value of the stock today.
This homework submission should include all calculations, completed on the designated tab of the Homework Student Workbook, and a document explaining the implications of your findings for the business or business transaction. After reading the assigned chapters, address the following questions:
- Turbo Technology Computers is experiencing a period of rapid growth. Earnings and dividends are expected to grow at a rate of 15% during the next two years, at 13% in the third year, and at a constant rate of 6% thereafter. Turbo’s last dividend was $1.15, and the required rate of return on the stock is 12%.
Complete the following calculations:
- Calculate the value of the stock today.
- Calculate P1^ and P2^.
- Calculate the dividend yield and capital gains yield for Years 1, 2, and 3.
- Kassidy’s Kabob House has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred sells for $50 a share. What is the stock’s required rate of return? Assume the market is in equilibrium with the required return equal to the expected return.
- McCaffrey’s Inc. has never paid a dividend, and when the firm might begin paying dividends is not known. Its current free cash flow (FCF) is $100,000, and this FCF is expected to grow at a constant 7% rate. The weighted average cost of capital (WACC) is 11%. McCaffrey’s currently holds $325,000 of non-operating marketable securities. Its long-term debt is $1,000,000, but it has never issued preferred stock. McCaffrey’s has 50,000 shares of stock outstanding.
Calculate the following:
- McCaffrey’s value of operations
- The company’s total value
- The estimated value of common equity
- The estimated per-share stock price