Question
An analyst is trying to use a dividend pricing model to evaluate Bank of America (BOA). After careful analysis, she projects BOA will pay the
An analyst is trying to use a dividend pricing model to evaluate Bank of America (BOA). After careful analysis, she projects BOA will pay the following dividends over the next three years:
| YEAR | 1 | 2 | 3 |
|---|---|---|---|
| Dividend | $1.00 | $1.25 | $1.40 |
After year 3, the analyst assumes a conservative growth rate of 4.00% per year for dividends. Based on the risk of BOA, she wants an 18.00% return on the stock. What price is BOA worth today?
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Fundamental Accounting Principles Volume II
Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann
16th Canadian edition
978-1260305838
