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I have been given the following projections for my corporation for the coming year.

Sales               =     10,000 units
Sales price per unit     =     $10
Variable cost per unit     =     $5
Fixed costs          =     $10,000
Bonds outstanding     =     $15,000
rd on outstanding bonds     =     8%
Tax rate          =     40%
Shares of common stock outstanding =     10,000 shares
Beta               =     1.4
rRF                =     5%
rM                =     9%
Dividend payout ratio     =     60%
Growth rate           =     8%

I need to calculate the current price per share for my corporation.


Optional Information:
Chesapeake, Virginia

Submitted: 1447 days and 21 hours ago.
Category: Finance
Value: $5
Status: CLOSED

Accepted Answer

Hello!

To be able to work out this problem, first you need to calculate the Dividend per share, and then next year's dividend. I have done that in the attached excel sheet.

Then you would need to calculate the rate of return using CAPM, i have done that on the attached Word document.

If you need any further clarification, please send me a message.

Please leave feedback

Thank you

2005-12-05_095018_currentprice.zip

Expert: Manal
Pos. Feedback: 100.0 %
Accepts: 
Answered: 12/5/2005

Tutor

Current MBA student with a GPA of 4.0

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