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Link to Excel File with Question Southeast Health Systems stock paid a dividend of $3.25 today. Analysts predict that Southeast's dividends will grow at a
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Southeast Health Systems stock paid a dividend of $3.25 today. | ||||||||
Analysts predict that Southeast's dividends will grow at a rate of 2% annually in the future. | ||||||||
Southeast's stock has a beta of 1.3 and current market conditions require a 5% return | ||||||||
on the market and the risk free rate is 2%. | ||||||||
a. What price would you expect to pay for Southeast's stock today, in one year and in two years? (6 points) | ||||||||
b. What is the current and capital gains yield expected in year 2? (4 points) |
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