TelTec Inc. stock is expected to sell for $10 per share four years from now. TelTec has

Question:

TelTec Inc. stock is expected to sell for $10 per share four years from now. TelTec has just paid a dividend of 50 cents per share. Dividends are expected to grow at a rate of 5 percent per year for the next four years. Assume that the required rate of return for TelTec stock is 15 percent.

a. What is the expected constant growth rate beginning in year 5?

b. What will the price of TelTec stock be five years from now?

c. What is TelTec's current stock price?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...