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Varigrowth Inc. just paid a dividend of $1.36 (i.e., DO = $1.36). Such dividend is expected to grow by 20% per year for the next
Varigrowth Inc. just paid a dividend of $1.36 (i.e., DO = $1.36). Such dividend is expected to grow by 20% per year for the next 3 years, after which it is expected to grow at a long-run rate of 2%. Assuming investors require a 14% return on the stock, a) What is the price at t=3? 29.078 (to the nearest cent) b) What is its price today? $ 24.488 (to the nearest cent) c) What is your total rate of return (% to two decimals) if in one year the price is $19.3 and the dividend is $1.63% What is your dividend yield? % What is your capital gain (loss) yield? %
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