Question
In excel please, This year, Shoreline Light and Gas (SL&G) paid its stockholders an annual dividend of $2.00 a share. A major brokerage firm recently
In excel please,
This year, Shoreline Light and Gas (SL&G) paid its stockholders an annual dividend of $2.00 a share. A major brokerage firm recently put out a report on SL&G predicting that the company's annual dividends should grow at the rate of 12
% per year for each of the next five years and then level off and grow at the rate of 6 % a year thereafter. (Note: Use four decimal places for all numbers in your intermediate calculations.)
a)Use the variable-growth DVM and a required rate of return of 10 %to find the maximum price you should be willing to pay for this stock.
b. Redo the SL&G problem in part a, this time assuming that after year 5, dividends stop growing altogether (for year 6 and beyond,
g equals 0 ). Use all the other information given to find the stock's intrinsic value.
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