Caifornia Clinics

California Clinics, an investor-owned chain of ambulatory care clinics, just compensable a dividend of $2 per share. The firms dividend is expected to clear at a constant prescribe of 5% per material body; andinvestors require a 15 % graze of return on the stock. 1. What is the stocks rate? E (Po) = Do x (1 + E (g)) / (R(Re)-E(g)) E (Po) = $2.00 x (1+ 0.05) / (0.15- 0.05) E (Po) = $2.00 x (1.05) / ( .1) E (Po) = $2.10 / .1 E (Po) = $ 21.00 There for the stock value is $21.00 2. Suppose the pretend of the stock decreases, which causes the postulate sum up of return to fall to 13%.Under these conditions, what is the stocks value? E (Po) = Do x (1 + E (g)) / (R(Re)-E(g)) E (Po) = $2.00 x (1+ 0.05) / (0.13- 0.05) E (Po) = $2.00 x (1.05) / ( .08) E (Po) = $2.10 / .08 E (Po) = $26.25 The stock value will increase because of the order of return to falling which is $26.25 3. Return to the original 15% necessary rate of return and assume a dividend growth r ate estimate increase to 7% per year, what is the stock value? substitute integrity growth investing is a lesson in the business leader of combination returns. The chart equation below shows the new value with an increase of divided growth rate (Gapenski, 2008) E (Po) = Do x (1 + E (g)) / (R(Re)-E(g)) E (Po) = $2.00 x (1+ 0.07) / (0.15- 0.07) E (Po) = $2.00 x (1.

07) / (.08) E (Po) = $2.14 / .08 E (Po) = $ 26.75 There for the stock value is $26.75 4.Explain how separately of the foursome (4) fundamental factors that bear on the preparation and demand for investment capital, and hence, saki rates, (namely productive opportunities, beat pre! ferences for consumption, risk, and inflation) affects the damage of money. Fundamental factors that affect the supply and demand for investment capital, and hence, kindle rates, (namely productive opportunities, time preferences for consumption, risk, and inflation) affects the cost of money. Investment opportunities is when the higher a profit a somebody may gain from a business the more(prenominal) interest rate a person can...If you want to absorb a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper