Good point. How much is their stock worth if they were to stop growing their dividend a 2.3% after 4 years and instead grow at 1.2% after that, indefinitely? (Answer with 2 decimals). $5.04 Hint - Use the two stage growth model Good point. How much is their stock worth if they were to stop growing their dividend at 2.3% after 4 years and instead grow at 1.2% after that, indefinitely? (Answer with 2 decimals). One of the options is Delta Airlines. They have paid an annual dividend of $3.80 for the past 25 years and we expect them to continue this indefinitely. Assuming the market requires a(n) 11.6% return from Delta, what is the value of a share of stock? (Answer with 2 decimals.) $32.76 Correct! And what if we assumed they would start increasing their dividend by 2.2% per year? What would be a fair price to pay in that scenario? (Answer with 2 decimals.) 1 And what if we assumed they would start increasing their dividend by 2.2% per year? What would be a fair price to pay in that scenario? (Answer with 2 decimals.) $40.43 Correct! Ok, so Delta is currently trading at $30.76. Yes, I see the same. Would you buy the stock at that price? All What about Kraft Heinz. They currently pay an annual dividend of $3.60 and we expect that to grow at a constant rate of 2.3%. Assuming the market requires a(n) 8.2% return from Kraft Heinz, what is their stock worth? (Answer with 2 decimals.) $61.02 Correct! It seems risky to assume they w always increase their dividend in the future. Good point. How much is their stock worth Enter a response then click Submit below $ Submit