Question
1A) What is the estimated current price of a share of ABC Company stock based on the Dividend Growth Model? The annual required rate of
1A) What is the estimated current price of a share of ABC Company stock based on the Dividend Growth Model? The annual required rate of return is 11.1%. ABC just paid their annual dividend of $2.67 a share and the expected growth rate of the dividend is 6% per year. Answer to the nearest penny.
1B) Starkiller Base Inc. expects to have a changing dividend policy over the next few years starting with the dividend that they just paid of $9.11. In the following year their dividend will grow by 16.7% and in the year after by 20.1%. Following that they expect their dividends to continue growing at a constant rate of 5.2% forever. If the required rate of return for Starkiller Base is 11.5% per year, what is the price today of their shares? Answer to the nearest penny.
1C) A stock just paid an annual dividend of $3.05 per share. The expected growth rate of the dividend is 2.91%. The required rate of return for the stock is 8.36% per annum. Based on the Dividend Growth Model, what is the expected dividend yield for the stock for the coming year? Answer as a percentage, 2 decimal places (e.g., 12.34% as 12.34).
ANSWER
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