Part 1:

What is the expected annual capital gain for Orange Corp stock , based on the Dividend Growth Model? The company plans to pay an annual dividend of of $4.09 per share in one year. The expected annual growth rate of the dividend is 9.99%, and the required rate of return for the stock is 14.18%. Answer as a percentage , 2 decimal places (e.g. , 12.34% as 12.34).

Answer:

Part 2:

The Wayne Corporation expects to have a changing dividend policy over the next few years starting with the dividend that they just paid of $7.84. In the following year their dividend will grow by 15.5% and in the year after by 12.9%. Following that they expect their dividends to continue growing at a constant rate of 4.1% forever. If the required rate of return for Wayne is 18.7% per year, what is the price today of Wayne shares ? Answer to the nearest penny .

Answer: