1. A company paid $1 per share dividend yesterday. You expect the dividend to grow steadily at...

Question:

1. A company paid $1 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4% per year. If the discount rate for the stock is 12% at what price, will the stock sell? What is the expected stock price 3 years from now? If you buy the stock and plan to hold it for 3 years what payment will you receive. I need answer and calculations.

2. Stock sells for $40. The next dividend will be $4 per share. If the rate of return earned on reinvested funds is 15% and the company reinvests 40 % of earnings in the firm. What must be the discount rate? Calculations and answer

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...