Question

1. Suppose the required rate of return on stock is 11% and the growth rate is 5%. If the current price of stock is $20, then what is the value of D1 (next period's dividend)?
2. Suppose the required rate of return on stock is 7.5% and the growth rate is 4.5%. If the current price of stock is $80, then what is the value of Do? 
3. Suppose the current price of stock is $25. What is the growth rate if next period's dividend is $2 and the required rate of return on stock is 12%? 
4. Suppose the current price of stock is $72. What is the growth rate if current period's dividend (Do) is $3 and the required rate of return on stock is 9.375%?



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  • CreatedAugust 26, 2013
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