Question
The XYZ Company is expected to pay a dividend of $10 per year for the next 5 years. After that, the dividends are expected to
The XYZ Company is expected to pay a dividend of $10 per year for the next 5 years. After that, the dividends are expected to grow at a rate of 8% forever. This cash flows from this company are considered relatively risk free, so the appropriate discount rate is 3% per year. Choose the best statement.
a. The expected price of the stock today is greater than $220.00
b. The expected price of the stock today is between $190.00 and $219.99
c. The expected price of the stock today is less than $190.00
d. The expected price of the stock today cannot be determined.
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