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Given: use Excel and show formula/step used Company pays a dividend of $1.60 per share. Company expected to grow at a constant rate of 6.5%
Given: | use Excel and show formula/step used | |||||
Company pays a dividend of $1.60 per share. | ||||||
Company expected to grow at a constant rate of 6.5% per year. | ||||||
RRR: | 13% | |||||
g: | 6.5% | |||||
Do: | $ 1.60 | |||||
Part A) Determine Expected dividend each year for the next 3 years: | ||||||
Year 1: | ||||||
Year 2: | ||||||
Year 3: | ||||||
Part B) Determine the following four Stock Prices: | ||||||
Equation: Po = Do * (1+g)/(r -g ) | ||||||
Stock Price currently: Po: | ||||||
Stock Price one year from now: or P1 | ||||||
Stock Price two years from now: or P2: | ||||||
Stock Price three years from now: or P3: | ||||||
Part C) Determine for Years 1 and 2 the Expected Yields: | ||||||
Year 1: | Expected dividend yield: D1/Po: | |||||
Expected capital gains yield: P1 - Po/Po: | ||||||
Year 2: | Expected dividend yield: D2/P1: | |||||
Expected capital gains yield: P2 - P1/P1: |
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