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2. Common Stock Assumption #2: growing perpetuity You are analyzing another share of XYZ Company common stock for possible purchase. Assume that your analysis has

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2. Common Stock Assumption #2: growing perpetuity You are analyzing another share of XYZ Company common stock for possible purchase. Assume that your analysis has revealed that you expect the UPCOMING dividend to be $25 per I share. Dividends are paid semiannually and are expected to grow at a rate of 10% (compounded semiannually) per year into the foreseeable future (i.e., forever). Your required rate of return on this stock is 14% per year, compounded semiannually. Further research reveals that this common stock has a market price of $1100 per share. A. Calculate the next four upcoming dividends for this common stock. That is, calculate D1,D2,D3, and D4. B. Calculate the value of this common stock based on the required rate of return. C. Calculate the expected return on this common stock based on the market price. D. Should you invest in the stock? Why or why not? Be sure to use your results from BOTH parts B and C above. 2. Common Stock Assumption #2: growing perpetuity You are analyzing another share of XYZ Company common stock for possible purchase. Assume that your analysis has revealed that you expect the UPCOMING dividend to be $25 per I share. Dividends are paid semiannually and are expected to grow at a rate of 10% (compounded semiannually) per year into the foreseeable future (i.e., forever). Your required rate of return on this stock is 14% per year, compounded semiannually. Further research reveals that this common stock has a market price of $1100 per share. A. Calculate the next four upcoming dividends for this common stock. That is, calculate D1,D2,D3, and D4. B. Calculate the value of this common stock based on the required rate of return. C. Calculate the expected return on this common stock based on the market price. D. Should you invest in the stock? Why or why not? Be sure to use your results from BOTH parts B and C above

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