Urgent please Problem (25 points) Lohn Corporation is expected to pay the following dividends over the...

Question

Question

Problem (25 points) Lohn Corporation is expected to pay the following dividends over the next four years: $11, 58, $550, and

Urgent please

Answer 1

Answer #1

1) Calculation of stock's current price:
Year	Amount	PVF @11.5%	Present value
1	11.00	0.897	9.87
2	8.00	0.804	6.43
3	5.50	0.721	3.97
4	2.45	0.647	1.59
4	33.97	0.647	21.98
Total			43.83

Current price is $43.83

Working:
Calculation of dividend:
Terminal value= Dividend(1+growth)/(return-growth)
=2.45*(1+0.04)/(0.115-0.04)
= 2.548/0.075= 33.97

Answer 2

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