A stock just paid a dividend of $2.00. Due to the introduction of a proprietary product, the dividend growth rate is expected to be 30 percent for the next two years, 15 percent for years 3 and 4, and then return to a constant growth rate assumption of 4 percent, thereafter. The required return on the stock is 18 percent.
Does anyone know:
(a) What is the current expected price of stock
(b) What is the expected price of the stock at Year 6
2007-03-23 16:56:37 · 3 answers · asked by Munch_101 1 in Education & Reference ➔ Homework Help
there is no way to know. stock prices are not determined by the information that you gave.
2007-03-23 17:01:26 · answer #1 · answered by Anonymous · 1⤊ 0⤋
Let me guess this is a college project for your finance course?
Who writes these hypothetical questions? A stock returning 30% for the next two years? Give your professor my e-mail address, I want to tell him/her to get his/her head out of his/her *** and get on some meds that will bring him/her back to reality... Ask your professor if they can get this type of return in real life then what are they teaching college for?
2007-03-24 00:04:19 · answer #2 · answered by Gman 4 · 0⤊ 0⤋
Whats the price of the stock initally?
I'm not going to answer the questions.. but rather help you..
2007-03-24 00:05:53 · answer #3 · answered by Dani_V98 2 · 0⤊ 0⤋