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Please show all work. Thank you. Suppose the stock price of Company A is $Qt. The expected dividend for the next three years is $8,$15
Please show all work. Thank you.
Suppose the stock price of Company A is $Qt. The expected dividend for the next three years is $8,$15 and $27 per share. The expected price of the stock in the fourth year is $250. The nominal rate of interest is i1t and is constant for next 3 years. Suppose another company Company B with the current stock price twice that of Company A, has the expected dividend of $20,$26 and $53 per share and expected price of the stock in the fourth year is $500. The equity premium is 50% per year of the nominal interest rate for holding the share for another two years. Calculate the current stock price of Company A($Qt). $Qt=$. (Round your answer to two decimal places.) Suppose the stock price of Company A is $Qt. The expected dividend for the next three years is $8,$15 and $27 per share. The expected price of the stock in the fourth year is $250. The nominal rate of interest is i1t and is constant for next 3 years. Suppose another company Company B with the current stock price twice that of Company A, has the expected dividend of $20,$26 and $53 per share and expected price of the stock in the fourth year is $500. The equity premium is 50% per year of the nominal interest rate for holding the share for another two years. Calculate the current stock price of Company A($Qt). $Qt=$. (Round your answer to two decimal places.)Step by Step Solution
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