1. Constant Growth Stock Value a Constant Growth Stock Financial analysts forecast Safeco Corp. (SAF) growth for...
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Question:
1. Constant Growth Stock Value a Constant Growth Stock Financial analysts forecast Safeco Corp. (SAF) growth for the future to be 5 percent. Safeco's recent dividend was $3.00. What is the value of Safeco stock when the required return is 14 percent?
Use equation: Constant growth model:
P0 = D0 (1 + g) (i + g)2
2. Verily Growth Verily Growth A fast-growing firm recently paid a dividend of $0.50 per share. The dividend is expected to increase at a 20 percent rate for the next 3 years. Afterward, a more stable 10 percent growth rate can be assumed. If a 12 percent discount rate is appropriate for this stock, what is its value?
Use equations
Related Book For
Finance Applications and Theory
ISBN: 978-0077861681
3rd edition
Authors: Marcia Cornett, Troy Adair
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