Price of stock is equal to present value of all future dividends
1. Price = D1/(Required Return – Growth rate)
= 4*1.06/(13%-6%)
= $60.57 per share
2.Price = 4*1.0/(13%-0%)
= $30.77 per share
3.Price = 4*1.11/(1.13) + 4*(1.11)^2/(1.13)^2 + 4*(1.11)^2(1.06)/(1.13)^2(13%-6%)
= $66.24 per share
An investor demands an annual return of 13 percent on her stock investments. She is considering...
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The
Herjavec Co just paid a dividend of 2.00 per share on its stock.
The dividends are expected to grow at a constant rate of 4 percent
per year indefinitely. Investors require a return of 12 percent on
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