Question
Please help me answer this multiple step question. A.) You're analyzing the stock of a certain company. The most recent dividend paid was $5 dollars
Please help me answer this multiple step question.
A.) You're analyzing the stock of a certain company. The most recent dividend paid was $5 dollars per share. The company's discount rate is 8%, and the firm is expected to grow at 4% per year forever. What is the dividend yield of this stock?
B.) Assume a corporation has just paid a dividend of $ 1.84 per share. The dividend is expected to grow at a rate of 2.4% per year forever, and the discount rate is 8%.
What should be the amount paid as a dividend per share next year?
C.) Assume that the Pure Expectation Theory determines interest rates in the markets. Today's market rates for different maturities are as follows:
1 year = 3.2%
2 years = 4.3%
3 years = 5.8%
4 years = 6.6%
5 years = 7.9%
What is the implied 2 year interest rate for investing in 3 years?
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