Question
Security analysts expect AGG to pay a $1.20 dividend and its stock to be sold for $15 next year. The required rate of return on
Security analysts expect AGG to pay a $1.20 dividend and its stock to be sold for $15
next year. The required rate of return on AGGs stock is 8%.
10)
What is the maximum price you would pay for AGGs stock today?
___
$15
_____(Make sure you can do this
problem to get these answers)
11)
FCE just paid a dividend of $1.00. The analysts consensus is that FCE's dividend will
be increased by 10% during the next three years. Calculate FCE's dividends for the next
three years.
__$1.1___, _$1.21_____, _$1.331____
____
12)
FCEs stock is selling for the same intrinsic value that you calculated for AGGs, and the
analysts consensus is that FCE's stocks will be selling for $17.53 three years from now.
Estimate the required rate of return for the FCE's stock
?
A)12.51%
B)12.98%
C) 14.0%
D)19.0%
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