Happy Valley Corporation is expected to pay a dividend of $12 per share next year and...

 

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Happy Valley Corporation is expected to pay a dividend of $12 per share next year and after that the dividends will grow for 5% per year every year forever. a) If the required rate of return is 100%, what is the current stock price? b) What is its dividend yield? c) What will be the stock price next year? d) Suppose starting next year the dividends will grow at 15% per year for 4 years and then the growth rate will decline to 4% per year. What should be the current stock price? Happy Valley Corporation is expected to pay a dividend of $12 per share next year and after that the dividends will grow for 5% per year every year forever. a) If the required rate of return is 100%, what is the current stock price? b) What is its dividend yield? c) What will be the stock price next year? d) Suppose starting next year the dividends will grow at 15% per year for 4 years and then the growth rate will decline to 4% per year. What should be the current stock price?

Answer rating: 100% (QA)

a To calculate the current stock price P0 we can use the Gordon Growth Model which is given by the f... View the full answer