Question

In: Finance

Get In Shape, Inc. just came up with a revolutionary new way to get in shape...

Get In Shape, Inc. just came up with a revolutionary new way to get in shape without exercising. The current dividend is $3.00 per share. Analysts are predicting 30% growth in the stock of GIS for the next three years, then after that, growth is expected to level off at 6%. The rate expected in the marketplace for stock such as GIS is 8%.

What is the current value of a share of Get In Shape, Inc.? ________________

What will the value of a share be in year 4? _________________

What will the value be in year 6? ______________________

Solutions

Expert Solution

8.0000%
Cash flows Year Discounted CF
                           -   0 0.00
                      3.90 1 3.61
                      5.07 2 4.35
                      6.59 3 5.23
                 349.32 3 277.30

Current value of the share = 290.49

value in year 4 = 6.59*1.06*1.06/(0.08-0.06) = 370.28

value in year 6 = 370.28*1.06*1.06 = 416.05


Related Solutions

video transcript: >> The talking: I mean, she just came out that way. She just the...
video transcript: >> The talking: I mean, she just came out that way. She just the minute she was born she screamed loudand she's never stopped talking. I mean she's--it's got to come from us: we're just very social people. And our entire families from his side to my side just very social people love to talk. So that's genetics all the way, and she is stubborn like her mother, and so yeahgenetics definitely play a role. >> Yeah. I...
What is the best way to get the activity of the enzyme back up?
You have added an irreversible inhibitor to a sample of enzyme and substrate. At this point, the reaction has stopped completely. What is the best way to get the activity of the enzyme back up?  
I have the solution.. I just do not know how they came up with some of...
I have the solution.. I just do not know how they came up with some of the answers. e.g. sales return and allowande. Exercise 5-11 Calculating income statement components L01,5 Referring to Exhibit 5.15 calculate the missing amounts (round to two decimal places). Company A Company B 2020 2019 2020 2019 Sales     $263,000.00 $187,000.00 ? 114200.00 $48,500.00 Sales Discount $2,630.00 ? 1350.00 $1,200.00 $570.00 Sales Return and Allowance ? 51570 $16,700.00 $6,200.00 ? 2430.00 Net Sales ? 208800.00 $168,950.00...
You are the international manager of a US business that has just invented a revolutionary new...
You are the international manager of a US business that has just invented a revolutionary new personal computer that can perform the same functions as existing PCs but costs only half as much to manufacture. Several patents protect the unique design of this computer. Your CEO has asked you to formulate a recommendation for how to expand into Western Europe. Your options are (a) to export from the US, (b) to license a European firm to manufacture and market the...
You are the international manager of a US business that has just invented a revolutionary new...
You are the international manager of a US business that has just invented a revolutionary new personal computer that can perform the same functions as existing PCs but costs only half as much to manufacture. Several patents protect the unique design of this computer. Your CEO has asked you to formulate a recommendation for how to expand into China. Evaluate the pros and cons of each alternative and suggest a course of action to your CEO. Please go in depth...
You are the international manager of a US business that has just invented a revolutionary new...
You are the international manager of a US business that has just invented a revolutionary new personal computer that can perform the same functions as existing PCs but costs only half as much to manufacture. Several patents protect the unique design of this computer. Your CEO has asked you to formulate a recommendation for how to expand into China. Evaluate the pros and cons of each alternative and suggest a course of action to your CEO. Please go in depth...
You are the international manager of a US business that has just invented a revolutionary new...
You are the international manager of a US business that has just invented a revolutionary new personal computer that can perform the same functions as existing PCs but costs only half as much to manufacture.  Several patents protect the unique design of this computer. Your CEO has asked you to formulate a recommendation for how to expand into Western Europe.  Your options are (a) to export from the US, (b) to license a European firm to manufacture and market the computer in...
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door...
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis,...
ou have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door...
ou have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis,...
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door...
You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company’s costing system and “do what you can to help us get better control of our manufacturing overhead costs.” You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis,...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT