Question
1) Constant growth dividend: A company is expected to pay a dividend of $2 next year (D 1 = $2). It has a constant growth
1) Constant growth dividend: A company is expected to pay a dividend of $2 next year (D1 = $2). It has a constant growth rate of 6% and a required return of 12%. What is the company's current stock price?
2) Non-constant growth dividends: Current dividend = D0 = $3. The growth rate = 20% for Year 0 to Year 1, 15% for Year 1 to Year 2, 10% for Year 2 to Year 3, and then long-run constant g = 6%. Investors required return = 15%. What is the current stock price?
3) Non-constant growth dividends: Current dividend = D0 = $3. The company estimates that its dividend in year 1 = $3.5, Dividend in year 2 = $4.5 and the stock price in two years, P2 is estimated to be $50. Investors required return = 15%. What is the current stock price (P0)?
4) Preferred stock: A company pays $2 in preferred dividend. It has a constant growth rate of 6%. What is the company's preferred stock price?
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