Unanswered Answered A stock just paid a dividend of $1.24. The dividend is expected to grow...

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Answer 1

Answer #1

	Required rate=	14.04%
Year	Previous year dividend	Dividend growth rate	Dividend current year	Horizon value	Total Value	Discount factor	Discounted value
1	1.24	23.02%	1.525448		1.525448	1.1404	1.3376
2	1.525448	23.02%	1.87660613		1.87660613	1.30051216	1.44297
3	1.87660613	23.02%	2.308600861	23.352	25.66060086	1.483104067	17.30196
	Long term growth rate (given)=	3.78%			*Value of Stock =*	*Sum of discounted value =*	20.08

Where
Current dividend =Previous year dividend*(1+growth rate)^corresponding year

Total value = Dividend + horizon value (only for last year)
Horizon value = Dividend Current year 3 *(1+long term growth rate)/( Required rate-long term growth rate)
Discount factor=(1+ Required rate)^corresponding period
Discounted value=total value/discount factor

Please ask remaining parts seperately, questions are unrelated

Answer 2

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