Question
Snap stock dividend at the end of the year is expected to be $4.5, and it is expected to grow at 12% per year forever.
Snap stock dividend at the end of the year is expected to be $4.5, and it is expected to grow at 12% per year forever. If the required rate of return on Snap stock is 17% per year, what is its intrinsic value?
If Snaps current market price is equal to the intrinsic value, what is next years expected price?
If an investor were buy Snap stock now and sell it after receiving the $4.5 dividend a year now, what is the expected capital gain (i.e., price appreciation) in percentage terms? What is the dividend yield, and what would be the holding-period return?
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