Question 8 of 20 1 Points MBI has an expected dividend of $1.10 per share next...

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Answer 1

Answer #1

Expected Dividend (D1) = $1.10
Growth rate (g) = 10%
D2 = D1 * (1 + g)
D2 = $1.10 * 1.10
D2 = $1.21

Stock Price in 2 years, P2 = $24.20
Discount Rate = 14%

Present Value = ($1.10/1.14) + ($1.21/1.14^2) + ($24.20/1.14^2)
= 0.9649 + 0.9311 + 18.6211
= $20.52
Present value of MBI = $20.52

Answer 2

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