Question
An analyst has been following American Dream stock. He projects the following dividends for the next three years: YEAR 1 2 3 Dividend $1.77 $2.18
An analyst has been following American Dream stock. He projects the following dividends for the next three years:
| YEAR | 1 | 2 | 3 |
|---|---|---|---|
| Dividend | $1.77 | $2.18 | $2.94 |
The analyst notes that American Dream stock has a required return of 10.26%. The analyst projects that dividends will grow at a constant rate of 2.00% per year after year 3.
What is the current price of the stock if his assumptions are correct?
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Algorithmic Finance A Companion To Data Science
Authors: Christopher Hian-ann Ting
1st Edition
9811238308, 978-9811238307
