Login
E-Mail Address:

Password:


 
Shopping Cart
0 items
 
CHARITY AND SPONSOR ADS

P7-23 ETHICS PROBLEM Melissa is trying to value Generic Utility- ANSWER KEY

P7-23 ETHICS PROBLEM  Melissa is trying to value Generic Utility- ANSWER KEY
Click to enlarge
Price: $5.99
Availability: In Stock
Model: A
Average Rating: 5 out of 5 Stars!

P7-23 ETHICS PROBLEM  Melissa is trying to value Generic Utility

P7-23 ETHICS PROBLEM  Melissa is trying to value Generic Utility, Inc.'s, stock, which is clearly not growing at all. Generic declared and paid a $5 dividend last year. The required rate of return for utility stocks is 11%, but Melissa is unsure about the financial reporting integrity of Generic's finance team. She decides to add an extra 1% "credibility" risk premium to the required return as part of her valuation analysis.

a. What is the value of Generic's stock, assuming that the financials are trustworthy?

b. What is the value of Generic's stock, assuming that Melissa includes the extra 1% "credibility" risk premium?

c. What is the difference between the values found in parts a and b, and how might one interpret that difference?

Write Review
Your Name:
    ( max 12 characters. )

Your Review:
You've typed 0 character(s). You are allowed lots more. Note: HTML is not translated!

Rating: Bad            Good

Enter the code in the box below:

There are no additional images for this product.