Question
9. XYZ Corp. just paid a dividend of $0.64. Dividends are expected to grow at a constant rate of 1.3% per year for indefinite future.
9. XYZ Corp. just paid a dividend of $0.64. Dividends are expected to grow at a constant rate of 1.3% per year for indefinite future. The required rate of return is 7%. Calculate the following:
- Price of the stock 5 years from today
- Price of the stock today
- Dividend Yield and Capital Gains Yield today
- Dividend Yield and Capital Gains Yield 5 years from today
10. A stock has currently paid a dividend of $2. This stock will pay following dividends over next five years: $2.65; $3:05: $4.10; $4.65; $5.05 If your required rate of return is 10%, how much maximum are you willing to pay for this stock today?
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