Calculate stock price based on dividend scenarios
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Problem A
In 1 year, a stock is expected to pay a $2.11 dividend and be priced at $50 per share. What is the stock's price today if the required rate of return on the stock is 8%?
Problem B
You expect a stock to pay a dividend of $1.59 and be priced at $38 in 1 year.
a. What is the stock's price today, assuming a required rate of return of 7%?
b. If the required rate of return is 6%, how would that change the stock's price today?
Problem C
What is the price today of a stock whose dividend is $3 per year forever? The stock's required rate of return is 7.5%.
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Problem A
In 1 year, a stock is expected to pay a $2.11 dividend and be priced at $50 per share. What is the stock's price today if the required rate of return on the stock is 8%?
The stock's price today is the present value of the dividend and ...
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