Question
1. An analyst has been following American Dream stock. He projects the following dividends for the next three years: YEAR 1 2 3 Dividend $1.68
1.
An analyst has been following American Dream stock. He projects the following dividends for the next three years:
| YEAR | 1 | 2 | 3 |
|---|---|---|---|
| Dividend | $1.68 | $2.53 | $2.99 |
The analyst notes that American Dream stock has a required return of 9.83%. The analyst projects that dividends will grow at a constant rate of 5.00% per year after year 3.
What is the projected selling price for the stock at the end of year 3?
2.What is the current price of the stock if his assumptions are correct?
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Intermediate Financial Management
Authors: Brigham, Daves
10th Edition
978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573
