Question
A Stock pays dividends of $1.00 at t = 1. (D 1 is provided here, not D 0 ) It is growing at 20% between
A Stock pays dividends of $1.00 at t = 1. (D1 is provided here, not D0) It is growing at 20% between
t =1 and t = 2, after which the growth rate drops to 10%, and will continue at that rate into the future.
If the discount rate for this stock is 15%, what should be the value of the stock at t = 0? Hint: Make a
diagram indicating ranges of the growth rates and the resulting dividends.
| $23.71 | ||
| $21.74 | ||
| $20.00 | ||
| $19.14 | ||
| $24.00 |
A Stock pays dividends of $1.00 at t = 1. (D1 is provided here, not D0) It is growing at 20% between
t =1 and t = 2, after which the growth rate drops to 10%, and will continue at that rate into the future.
If the discount rate for this stock is 15%, what should be the value of the stock at t = 0? Hint: Make a
diagram indicating ranges of the growth rates and the resulting dividends.
$23.71
$21.74
$20.00
$19.14
$24.00
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Python For Finance
Authors: Yves Hilpisch
2nd Edition
1492024333, 978-1492024330
