Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Rework Toble 7.4 for horizon years 1,2,3, and 10 , assuming that investors expect the dividend and the stock price to increase at only 6%

image text in transcribed
image text in transcribed
Rework Toble 7.4 for horizon years 1,2,3, and 10 , assuming that investors expect the dividend and the stock price to increase at only 6% a year and that each investor requires the same 12% expected return. The company will pay a dividend of $4.80 ar the end of the first year: What value would an investor place on the stock? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. \begin{tabular}{|c|c|c|c|} \hline Horizon (years) & PV (dividends) & \begin{tabular}{c} PV (terminal \\ price) \end{tabular} & Value per Share \\ \hline 1 & $2.68 & $72.32 & $75 \\ \hline 2 & 5.26 & 69.74 & 75 \\ \hline 3 & 7.75 & 67.25 & 75 \\ \hline 10 & 22.87 & 52.13 & 75 \\ \hline 20 & 38.76 & 36.24 & 75 \\ \hline 30 & 49.81 & 25.19 & 75 \\ \hline 50 & 62.83 & 12.17 & 75 \\ \hline 100 & 73.02 & 1.98 & 75 \\ \hline \end{tabular}

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Investments

Authors: Zvi Bodie, Alex Kane, Alan J. Marcus

7th Edition

0073368717, 978-0073368719

More Books

Students also viewed these Finance questions

Question

What rules, if any, should govern mobile marketing to children?

Answered: 1 week ago

Question

outline the foundations of understanding change and change work

Answered: 1 week ago