Big Chunky just paid a $2.10 per share dividend this year. The dividend is expected to grow
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Question:
Big Chunky just paid a $2.10 per share dividend this year. The dividend is expected to grow at a constant rate of 3% a year. The required rate of return on the stock is 10%.
a. What is the stock's current value per share? (5 points)
b. Continue the previous question. A well-known analyst following Big Chunky has just issued a report. She estimated its stock value to be $44.10 per share. What constant growth rate did the analyst use in her calculations? Use the most recent dividend and the required return from the previous question (5 points).
Related Book For
Financial management theory and practice
ISBN: 978-1439078099
13th edition
Authors: Eugene F. Brigham and Michael C. Ehrhardt
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