Question
The Extreme Reaches Corp. last paid a $1.50 per share annual dividend. The company is planning on paying $3.00, $5.00, $7.50, and $10.00 a share
The Extreme Reaches Corp. last paid a $1.50 per share annual dividend. The company is planning on paying $3.00, $5.00, $7.50, and $10.00 a share over the next four years, respectively. After that the dividend will be a constant $2.50 per share per year.
A.) What is the market price of this stock today if the market rate of return is 15%? Also estimate the dividend yield over the first year.
B.) Continue from the previous problem. What is the market price of this stock in one year? What is the capital gains yield over the first year?
Im looking for help on part B, I have already completed part A but it would be helpful to check my answer. ($26.57/share) Thank you!
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