Question
Integrated Potato Chips paid a $1.50 per share dividend yesterday . You expect the dividend to grow steadily at a rate of 6% per year.
Integrated Potato Chips paid a $1.50 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 6% per year. |
a. | What is the expected dividend in each of the next 3 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| Expected Dividend |
Year 1 | $ |
Year 2 |
|
Year 3 |
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b. | If the discount rate for the stock is 10%, at what price will the stock sell today? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
Current price | $ |
c. | What is the expected stock price 3 years from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) |
Future price | $ |
d. | If you buy the stock and plan to hold it for 3 years, what payments will you receive? What is the present value of those payments? (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.) |
d. | If you buy the stock and plan to hold it for 3 years, what payments will you receive? What is the present value of those payments? (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| Year 1 |
| Year 2 |
| Year 3 |
|
Dividend | $ |
| $ |
| $ |
|
Sale of stock |
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Total cash flow | $ |
| $ |
| $ |
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PV of cash flow | $ |
| $ |
| $ |
|
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