Question

1) An analyst forecasts to have expected dividends of $3.15 year 1 (Divl), S3.50 year 2 (Div2), S3.85 year 3 (Div3), and S4.20 year 4 (Div4) for Bear Company. The stock price is estimated to be $18.00 in year 4. Equity Cost of Capital (Re) is 7.00% Calculate the current stock price P0 using the Dividend Discount Model . 2) An analyst forecasts to have expected dividends of $5.00 year 1 (Divl), S5.20 year 2 (Diy2), $5.40 year 3 (DİV3), $5.60 year 4 (Div4), and S5.80 year 5 (Div5) for Cougar Company. The stock price is estimated to be $50.00 in year 5. Equity Cost of Capital (Re) is 9.00%. Calculate the current stock price P0 using the Dividend Discount Model .3) An analyst forecasts to have expected dividends of $4.15 year 1 (Divl), $4.30 year 2 (Div2), and $4.45 year 3 (Div3) for Dolphin Company. The stock price is estimated to be $25.00 in year 3. Equity Cost of Capital (Re) is 8.00%. Calculate the current stock price PO using the Dividend Discount Model . 4) An analyst forecasts to have expected dividends of $2.40 year 1 (Divl), $2.60 year 2 (Div2), $2.80 year 3 (Div3), and $3.00 (Div4) for Elephant Company. The stock price is estimated to be $22.00 in year 4. Equity Cost of Capital (Re) is 6.00%. Calculate the current stock price P0 using the Dividend Discount Model

Answer 1

(1) Expected Annual Dividends:

Year 1 = $ 3.15, Year 2 = $ 3.5, Year 3 = $ 3.85 and Year 4 = $ 4.2, Price at the end of Year 4 = P4 = $ 18 and Equity Cost of Capital = 7%

Current Stock Price = Sum of present values of expected dividends and the expected sale price at the end of year 4 = 3.15 / 1.07 + 3.5 / (1.07)^(2) + 3.85 / (1.07)^(3) + 4.2 / (1.07)^(4) + 18 / (1.07)^(4) = $ 26.08

NOTE: Please raise separate queries for solutions to the remaining unrelated questions, as one query is restricted to the solution of only one complete question with up to four sub-parts.