Figuring stock values and dividends payouts.
A company paid a $1 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4 percent per year.
A. What is the expected dividend in each of the next 3 years?
B. If the discount rate for the stock is 12 percent, at what price will the stock sell?
C. What is the expected stock price 3 years from now?
D. If you buy the stock and plan to hold it for 3 years, what payments will you receive? What is the present value of those payments? Compare the answer to (b).© BrainMass Inc. brainmass.com March 4, 2021, 7:41 pm ad1c9bdddf
This solution contains step-by-step analysis of changes to stock values and dividend payouts over years. All workings and formulas are shown enclosed in an Excel file.