Question

9)The investment banking firm of Einstein & Co. will use a dividend valuation model to appraise the shares of the Modern Physics Corporation. Dividends (D₁) at the end of the current year will be $1.25. The growth rate (g) is 9 percent and the discount rate (K_e) is 12 percent.  
 a.What should be the price of the stock to the public? (Do not round intermediate calculations and round your answer to 2 decimal places.)  
   Price of the stock$     b.If there is a 5 percent total underwriting spread on the stock, how much will the issuing corporation receive? (Do not round intermediate calculations and round your answer to 2 decimal places.)   
   Net price to the corporation$      c.If the issuing corporation requires a net price of $40.17 (proceeds to the corporation) and there is a 5 percent underwriting spread, what should be the price of the stock to the public? (Do not round intermediate calculations and round your answer to 2 decimal places.)  
   Necessary public price$

Looking for a Similar Assignment? Order now and Get 10% Discount! Use Coupon Code "Newclient"