Share
Explore BrainMass

Company Z and KIC, Inc.: Finance questions

Solve questions on a Microsoft Word document showing how you solve the problem.

Attachments

Solution Preview

7. D1 = 10
g = 5%
k = 8%
By DDM, stock price = D1 / (k - g) = 10 / (8%-5%) = 333.33

8. D1=10
D2 = 10*(1+5%) = 10.5
D3=10*(1+5%) = 11.03
D4 = 11.03*(1+5%) = 11.58
Since all earnings are paid out, growth rate becomes zero after year 4.
D5 = D4 = ...

Solution Summary

You will find the answer to this puzzling assignment inside...

$2.19