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Horse and Buggy Inc. is in a declining industry. Sales, earnings, and dividends are all shrinking at a rate of 5% per year. a. If
Horse and Buggy Inc. is in a declining industry. Sales, earnings, and dividends are all shrinking at a rate of 5% per year. |
a. | If r = 15% and DIV1 = $4, what is the price of a share? (Do not round intermediate calculations.) |
Price of a share | $ |
b. | What price do you forecast for the stock one year from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
Stock price | $ |
c. | What is the cost of capital on the stock? (Do not round intermediate calculations.) |
Cost of capital | % |
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