Suppose that stockbrokers have projected that Jamestown Savings will pay a dividend of $2 50 per share on its common stock at the end of the year a dividend of $3 25 per share is expected for the next year, and $4 00 per share in the following two years The risk adjusted cost of capital for banks i...

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Suppose that stockbrokers have projected that Jamestown Savings will pay a dividend of $2.50 per share on

Question:

Suppose that stockbrokers have projected that Jamestown Savings will pay a of $2.50 per share on its at the end of the year; a of $3.25 per share is expected for the next year, and $4.00 per share in the following two years. The risk-adjusted for banks in Jamestown’s risk class is 15 percent. If an investor holding Jamestown’s stock plans to hold that stock for only four years and hopes to sell it at a price of $50 per share, what should the value of the bank’s stock be in today’s market?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...