Question
The last dividend of company ABC was $5 per share. The annual long term growth rate of the company is forecasted to be %10 and
The last dividend of company ABC was $5 per share. The annual long term growth rate of the company is forecasted to be %10 and expected rate of return is 25%. Show all of your work clearly in the solution.
A. What should be the current (t0) market price of this share?
B. What will be the expected share price after one year(t=1) if the assumptions stay the same?
C. What is the annual rate of return of investor who buys the ABC stock today(t0) and sells after one year (t=1)?
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Guardians Of Finance
Authors: James R. Barth, Gerard Caprio, Ross Levine
1st Edition
0262526840, 978-0262526845
