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# Stock Values. Integrated Potato Chips

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Stock Values. Integrated Potato Chips paid a \$1 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4 percent per year

What is the expected dividend in each of the next 3 years?
If the discount rate for the stock is 12 percent, at what price will the stock sell?
What is the expected stock price 3 years from now?
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 your answer to (b).

done in excel spread sheet with complete formula for each question

#### Solution Preview

Kao-wen Peng

What is the expected dividend in each of the next 3 years?
Year 0 Year 1 Year 2 Year 3
expected dividend 1 1.04 1.08 1.12

If the discount rate for the stock is 12 percent, at what price will the stock sell?

We can find the appropriate stock ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer what is the expected dividend in each of the next 3 years?
If the discount rate for the stock is 12 percent, at what price will the stock sell, what is the expected stock price 3 years from now, what payments will you receive, and what is the present value of those payments.

\$2.49