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Apex Co. stock just paid $1.50 dividend per share. The market expects that the dividend will...

Apex Co. stock just paid $1.50 dividend per share. The market expects that the dividend will grow at 5% annually for the next 2 years and then 3% annually forever. Assuming a required return of 10%, how much is the present value of the stock?

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Answer #1

Year 1 Cash flows $1.58 $1.65 $24.33 pv @10% 0.9091 0.8264 Present value $1.43 $1.37 $20.11 $22.91 Price at year 2 0.8264 (1.

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Answer #2

Price at 2 years (discounted)= 2.8

price after 2 years (discounted)= 20.11

P0= 20.11 + 2.8 = 22.91

answered by: Ayyas
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