Question
Your broker offers to sell you some shares of Bahnsen & Co. common stock that paid a dividend of $1.75 yesterday. Bahnsen's dividend is expected
Your broker offers to sell you some shares of Bahnsen & Co. common stock that paid a dividend of $1.75 yesterday. Bahnsen's dividend is expected to grow at 6% per year for the next 3 years. If you buy the stock, you plan to hold it for 3 years and then sell it. The appropriate discount rate is 10%. ONLY THE ANSWERS FOR D and E are the ones I need. A,B, C are correct
Find the expected dividend for each of the next 3 years; that is, calculate D1, D2 and D3. Note that D0 = $1.75. Round your answer to the nearest cent. D1 = $ D2 = $ D3 = $
Given that the first dividend payment will occur 1 year from now, find the present value of the dividend stream; that is, calculate the PVs of D1, D2, and D3 and then sum these PVs. Round your answer to the nearest cent. Do not round your intermediate calculations. $
You expect the price of the stock 3 years from now to be $55.23; that is, you expect to equal $55.23. Discounted at a 10% rate, what is the present value of this expected future stock price? In other words, calculate the PV of $55.23. Round your answer to the nearest cent. Do not round your intermediate calculations. $
If you plan to buy the stock, hold it for 3 years, and then sell it for $55.23, what is the most you should pay for it today? Round your answer to the nearest cent. Do not round your intermediate calculations. $
Use equation below to calculate the present value of this stock.
P-hat0=Do(1+g)/rs-g Assume that g = 6% and that it is constant. Do not round intermediate calculations. Round your answer to the nearest cent. $
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