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26. IBIS Corporation has had dividends grow from $2.50 per share to $6.50 per share over the last 10 years (the $6.50 per share dividend
26. IBIS Corporation has had dividends grow from $2.50 per share to $6.50 per share over the last 10 years (the $6.50 per share dividend was paid yesterday; that is, Do = $6.50). This compounded annual growth rate in dividends is expected to continue into the future forever. If the current market price of IBIS's stock is $45.00 per share, what rate of return do investors expect to receive from buying IBIS stock? 27. A firm will pay a dividend of $0 one year from today and $5.00 two years from today (that is, D1 = $0 and D2 = 5.00). Thereafter, the dividend is expected to grow at a constant rate forever. The price of this stock today is $100 and the required rate of return on the stock is 10%. What is the expected constant growth rate of the dividend stream from year 2 to infinity
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