financial analyst forecast Safeco core growth rate for the future to be 12% Safeco is recent...
financial analyst forecast Safeco core growth rate for the future to be 12% Safeco is recent dividend was 1.65 what is the value of Safeco stock when the required return is 14%
Homework Answers
Perpetual Growth Rate = 12 %, Cost of Equity = Required Return = 14 % and Current Dividend = D0 = $ 1.65
D1 = Expected Dividends Next Year = D0 x 1.12 = 1.65 x 1.12 = $ 1.848
Current Stock Price of Safeco = [D1/(Required Return - Growth)] = [1.848/(0.14-0.12)] = $ 92.4
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