Question
The Exacta Corp. is expected to pay a dividend of $0.80 in the coming year. Their dividend is expected to grow at a rate of
The Exacta Corp. is expected to pay a dividend of $0.80 in the coming year. Their dividend is expected to grow at a rate of 40% in the following year, and 20% for the next three years after that. From then on, the dividend is expected to grow at a rate of 4% for the foreseeable future. If the required rate of return for Exactas common stock is 11%, what should be the stocks price per share? If you were to buy the stock at the price you have just calculated, what would be the expected dividend yield and capital gains yield for the first year?
Please show calculations. Thank you.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started