A company has just paid a $2 dividend per share. The dividend is expected to grow at a constant rate of 9% per year for 3 years. After that, the dividend is expected to keep growing at a constant rate of 3% per year. The required return is 9%. What will the stock price be in 2 years?
Last Dividend, D0 = $2.00
Growth rate for next 3 years is 9% and a constant growth rate (g) of 3% thereafter
D1 = $2.0000 * 1.09 = $2.1800
D2 = $2.1800 * 1.09 = $2.3762
D3 = $2.3762 * 1.09 = $2.5901
D4 = $2.5901 * 1.03 = $2.6678
Required Return, rs = 9%
P3 = D4 / (rs - g)
P3 = $2.6678 / (0.09 - 0.03)
P3 = $2.6678 / 0.06
P3 = $44.4633
P2 = D3 / (1 + rs) + P3 / (1 + rs)
P2 = $2.5901 / 1.09 + $44.4633 / 1.09
P2 = $43.17
Therefore, stock price in 2 years will be $43.17
A company has just paid a $2 dividend per share. The dividend is expected to grow...
A company has just paid a $2 dividend per share. The dividend is expected to grow at a constant rate of 9% per year for 3 years. After that, the dividend is expected to keep growing at a constant rate of 3% per year. The required return is 9%. What will the dividend be in 4 years?
A company has just paid a $2.10 dividend per share. The dividend is expected to grow at a constant rate of 3% per year. The required return is 8%. What is the current value of the company’s stock?
A company just paid a $2 dividend per share. The dividend growth rate is expected to be constant at 10% for 3 years, after which dividends are expected to grow at a rate of 4% forever. If the company’s required return (rs) is 10%, what is its current stock price?
A company has just paid a $2 per share dividend. The dividends are expected to grow by 24% a year for 8 years. The growth rate in dividends thereafter is expected to stabilize at 4% a year. The appropriate annual discount rate for the company’s stock is 12%. a. What is the company’s current equilibrium stock price? b. What is the company’s expected stock price in 20 years?
A company just paid a dividend of $1.70 per share. You expect the dividend to grow 13% over the next year and 9% two years from now. After two years, you have estimated that the dividend will continue to grow indefinitely at the rate of 4% per year. If the required rate of return is 12% per year, what would be a fair price for this stock today? (Answer to the nearest penny.)
LED, Inc. just paid a dividend of $2.50 per share. The dividends are expected to grow for the next 3 years at 8% per year, then grow at 3% per year forever. The required rate of return for LED stock is 12% per year. What should the market price of LED stock be? What should the ex-dividend stock price of LED be in year 2? If you purchased the share of LED at time 2, at the price you calculated...
1) A7X Corp. just paid a dividend of $1.30 per share. The dividends are expected to grow at 30 percent for the next 9 years and then level off to a growth rate of 9 percent indefinitely. If the required return is 13 percent, what is the price of the stock today? 2) Burnett Corp. pays a constant $19 dividend on its stock. The company will maintain this dividend for the next 6 years and will then cease paying dividends...
A7X Corp. just paid a dividend of $1.40 per share. The dividend are expected to grow at 35 percent for the next 6 years and then level off to a growth rate of 9 percent indefinitely. If the required return is 13 percent, what is the price of the stock today? A)$127.31 B)$110.92 C)$129.86 D)$0.50 E)$124.77
QWE Corporation just paid a dividend of $2 a share. The dividends are expected to grow at 10% a year for the next 3 years, and the 5% per year thereafter. The required rate of return on QWE stock is 12%. What is the current price of QWE? Question 8 options: Not enough information. $22.68 $35.58 $28.47 $34.26
QWE Corporation just paid a dividend of $2 a share. The dividends are expected to grow at 10% a year for the next 3 years, and the 5% per year thereafter. The required rate of return on QWE stock is 12%. What is the current price of QWE? Question 40 options: Not enough information. $35.58 $28.47 $34.26 $22.68