Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tesla expected to pay a dividend of $0.80 per share. The dividend is expected to increase by 6% the following yerar; 5% the third year

Tesla expected to pay a dividend of $0.80 per share. The dividend is expected to increase by 6% the following yerar; 5% the third year and 4% the 4th year. The dividend is expected to be constant forever after year 4 at its year 4 level. Investors expect a return of 13% per year on the stock.

1. What is the market price per share of it?

2. What will the price of the share be at the end of 1 year from today after the 0.80 dividend?

3. What rate of return will shareholders earn over year 1? r= (Change in price+ Dividend)/Initial price

Please show full work.

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

Sports Finance And Management Real Estate Media And The New Business Of Sport

Authors: Jason A. Winfree, Mark S. Rosentraub, Brian M Mills, Mackenzie Zondlak

2nd Edition

1138341819, 9781138341814

More Books

Students also viewed these Finance questions