Question
BlueBird Enterprises expects dividends to grow at 25% per year during the next 2 years, 15% during the 3rd year, 5% during year 4 and
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BlueBird Enterprises expects dividends to grow at 25% per year during the next 2 years, 15% during
the 3rd year, 5% during year 4 and then will start declining at 5% per year indefinitely. Stock is currently selling for $28.85 per share, and the required rate of return is 12%.
1. What is the projected dividend for the coming year? 2. If you buy the stock 4 years from today and sell it after keeping for one year what will be
the dividend yield, capital gain yield, and the total yield?
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Elgoog Technologies Limited (ETL) predicts that the companys earnings and dividends will continue
to grow at 16% per year for ___ years, and after that growth will level off at 5% for the indefinite future. ETL has just paid a dividend of $2 per share and the required rate of return on ETL stock is 16%. If ETL stock is currently trading at $41.09 per share, then how many years of 16% per year growth is the market predicting?
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