Question
2. a. The next dividend payment by Hot Wings, Inc., will be $4.78 per share. The dividends are anticipated to maintain a 0.03 growth rate
2. a. The next dividend payment by Hot Wings, Inc., will be $4.78 per share. The dividends are anticipated to maintain a 0.03 growth rate forever. If the stock currently sells for $48 per share, what is the required return? Anser with 4 decimals (e.g. 0.1234)
b. Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next 7 years because the firm needs to plow back its earnings to fuel growth. The company will pay a $7.23 per share dividend in 8 years and will increase the dividend by 0.06 per year thereafter. If the required return on this stock is 0.13, what is the current share price? Answer with 2 decimals (e.g. 45.45).
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