# stocks and dividends

1. Paid dividend of $2 per share. Expected to grow at a constant rate of 5% per year, and investors require a 15% rate of return on the stock. What is the stock's value?

2. Suppose the riskiness of the stock decreases, which causes the required rate of return to fall to 13%. Under these conditions, what is the stock's value?

3. Return to the original 15% required rate of return and assume a dividend growth rate estimate increase to 7% per year, what is the stock value?

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stocks and dividends

1. Paid dividend of $2 per share. Expected to grow at a constant rate of 5% per year, and investors require a 15% rate of return on the stock. What is the stock's value?

P = D_0(1 + g) where ...

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