Question
Wildhorse Natural Foods' current dividend is $9.50. You expect the growth rate to be 0 percent for years 1 to 5, and 2 percent for
Wildhorse Natural Foods' current dividend is $9.50. You expect the growth rate to be 0 percent for years 1 to 5, and 2 percent for years 6 to infinity. The required rate of return on this firms equity is 8 percent.
a) Determine the expected dividend at the end of year 5. ANS: $9.50
b) Determine the expected dividend at the end of year 6. ANS: $9.70
c) Determine the expected price of the stock at the end of year 5 (immediately after the year 5 dividend). ANS: $161.50
d) Determine the price of the stock today. ANS: ???
*just part d)
*With steps (no Excel)
Thanks!!
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