Suppose a company has just paid a dividend of $3.25 for a share of stock, and...

 

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Suppose a company has just paid a dividend of $3.25 for a share of stock, and this dividend is expected to remain the same forever. If your required rate of return (aka discount rate) is 14.5%, what valuation would you give to a share of stock? Suppose the same company's dividends are expected to grow at 3% forever, what valuation would you give to a share of stock? . Suppose the same company's dividends are expected to grow at 20% for 3 years before they settle down to a constant growth rate of 3%, what valuation would you give to a share of stock? Suppose a company has just paid a dividend of $3.25 for a share of stock, and this dividend is expected to remain the same forever. If your required rate of return (aka discount rate) is 14.5%, what valuation would you give to a share of stock? Suppose the same company's dividends are expected to grow at 3% forever, what valuation would you give to a share of stock? . Suppose the same company's dividends are expected to grow at 20% for 3 years before they settle down to a constant growth rate of 3%, what valuation would you give to a share of stock?

Answer rating: 100% (QA)

Lets calculate the valuation of the stock in each scenario using the Gordon Growth Model also known ... View the full answer