Question
Consider a stock with current year dividend equal to $2.00 per share. You believe the dividend will grow 15% per year for 10 years and
Consider a stock with current year dividend equal to $2.00 per share. You believe the dividend will grow 15% per year for 10 years and 4% per year thereafter.The required equity rate of return (and your hurdle rate) is 10%.
What is the fair price of the stock?
Assuming the market price of the stock is $70, what is the expected return?
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Fundamentals of Investing
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
12th edition
978-0133075403, 133075354, 9780133423938, 133075400, 013342393X, 978-0133075359
