Question
Walmart is a large supermarket chain that operates all over the US. The company just paid a dividend of $1.50 per share. They expect dividends
Walmart is a large supermarket chain that operates all over the US. The company just paid a dividend of $1.50 per share. They expect dividends to grow by 7% each year and investors currently require a return of 14% from this company? a) Using the Gordon Growth model, what would the stock trade for today? b) What is the dividend payment in 4 years expected to be? c) Using the information calculated in part (b) what would the stock price be in 4 years? d) If the company decides to make its last dividend payment in 10 years, what would be the price of the stock today if it is based on the expected dividend payment stream?
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