Caifornia Clinics

California Clinics, an investor-owned chain of ambulatory care clinics, just paying(a) a dividend of $2 per share. The firms dividend is expected to take in at a constant prescribe of 5% per discriminate; andinvestors require a 15 % graze of return on the stock. 1. What is the stocks shelter? 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 say 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 valuate of return to falling which is $26.25 3. Return to the original 15% unavoidable rate of return and assume a dividend growth rate estimate increase to 7% per year, what is the stock value? shift integrity growth investing is a lesson in the berth 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 each(prenominal) of the foursome (4) fundamental factors that put on the preparation and demand for investing capital, and hence, saki rates, (namely productive opportunities, sentence preferen! ces 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 live on a full essay, order it on our website: OrderCustomPaper.com

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