Calculate the value of the stock today

This homework submission should include all calculations, completed on the designated tab of the Homework Student Workbook,
and a document explaining the implications of your findings for the
business or business transaction. After reading the assigned chapters,
address the following questions:

1. Turbo Technology Computers is experiencing a period of rapid growth.
   Earnings and dividends are expected to grow at a rate of 15% during the
   next two years, at 13% in the third year, and at a constant rate of 6%
   thereafter. Turbo’s last dividend was $1.15, and the required rate of
   return on the stock is 12%.

Complete the following calculations:

1. Calculate the value of the stock today.
2. Calculate P1^ and P2^.
3. Calculate the dividend yield and capital gains yield for Years 1, 2, and 3.

1. Kassidy’s Kabob House has preferred stock outstanding that pays a
   dividend of $5 at the end of each year. The preferred sells for $50 a
   share. What is the stock’s required rate of return? Assume the market is
   in equilibrium with the required return equal to the expected return.

1. McCaffrey’s Inc. has never paid a dividend, and when the firm might
   begin paying dividends is not known. Its current free cash flow (FCF) is
   $100,000, and this FCF is expected to grow at a constant 7% rate. The
   weighted average cost of capital (WACC) is 11%. McCaffrey’s currently
   holds $325,000 of non-operating marketable securities. Its long-term
   debt is $1,000,000, but it has never issued preferred stock. McCaffrey’s
   has 50,000 shares of stock outstanding.

Calculate the following:

1. McCaffrey’s value of operations
2. The company’s total value
3. The estimated value of common equity
4. The estimated per-share stock price

For additional details, please refer to the Homework Guidelines and
Rubric document in the Assignment Guidelines and Rubrics section of the
course.