Seitz Glassware is trying to determine its growth rate for an annual cash dividend. The most...
Seitz Glassware is trying to determine its growth rate for an annual cash dividend. The most recent dividend, Div 0, was $ 0.30 per share. The stock's target return rate is 12%. What is the stock's price if a. the annual growth rate is 2%? b. the annual growth rate is 5%? c. the annual growth rate is 6%? d. the annual growth rate is 8%? e. the annual growth rate is 11%?
Homework Answers
Using DDM Model,
a.
Annual Growth Rate = 2%
Stock Price = 0.30(1.02)/(0.12 - 0.02)
Stock Price = $3.06
b.
Annual Growth Rate = 6%
Stock Price = 0.30(1.06)/(0.12 - 0.06)
Stock Price = $5.3
c.
Annual Growth Rate = 8%
Stock Price = 0.30(1.08)/(0.12 - 0.08)
Stock Price = $8.1
d.
Annual Growth Rate = 11%
Stock Price = 0.30(1.11)/(0.12 - 0.11)
Stock Price = $33.3
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