Question
i.A stock is expected to pay a dividend of Rs.0.50 at the end of the year (D1), the constant growth rate is 7% a year.
i.A stock is expected to pay a dividend of Rs.0.50 at the end of the year (D1), the constant growth rate is 7% a year. If its required return is 12%, what is the stock's expected price 4 years from today?
ii.Investors require a 15% rate of return on ABC Company's stock. What is its value if the previous dividend was Rs.2 and investors expect dividends to grow at a constant annual rate of (1) -5%, (2) 0%, (3) 5%, or (4) 10%?
iii.Calculate the rate of return on a preferred stock if Rs.100 is a par value, a dividend of 8% of par, and a current market price of (a) Rs.60, (b) Rs.80, and (c) Rs.140?
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