The expectation of the stock when company is in equilibrium.

A stock is expected to pay a year-end dividend of $2.00, i.e., D = $2.00. The dividend is expected to decline at a rate of 5% a year forever (g = -5%). If the company is in equilibrium and its expected and required rate of return is 15%, what should be expected of the stock?

Solution Summary

This post discussed the expectation of the stock when company is in equilibrium.