Question
1. Last week, Welch Industries paid their annual dividend of $1.04 on their common stock. The company predicts that the dividend will increase by 2.1%
1. Last week, Welch Industries paid their annual dividend of $1.04 on their common stock. The company predicts that the dividend will increase by 2.1% each year indefinitely.
What is the required rate of return on this stock if this stock is currently selling for $28.24 per share?
2. Last week, Welch Industries paid their annual dividend of $1.87 on their common stock. The company predicts that the dividend will increase by 2.9% each year indefinitely.
What is the expected intrinsic value (price) of this this stock in 5 years if this stock is currently selling for $32.62 per share?
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Financial Management for Public, Health and Not-for-Profit Organizations
Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell
5th edition
1506326846, 9781506326863, 1506326862, 978-1506326849
