# Question

TelTec Inc. stock is expected to sell for $10 per share four years from now. TelTec has just paid a dividend of 50 cents per share. Dividends are expected to grow at a rate of 5 percent per year for the next four years. Assume that the required rate of return for TelTec stock is 15 percent.

a. What is the expected constant growth rate beginning in year 5?

b. What will the price of TelTec stock be five years from now?

c. What is TelTec's current stock price?

a. What is the expected constant growth rate beginning in year 5?

b. What will the price of TelTec stock be five years from now?

c. What is TelTec's current stock price?

## Answer to relevant Questions

JINX Ltd. had earnings per share of $5 as at December 31, 2012, but paid no dividends. Earnings were expected to grow at 15 percent per year for the following five years. JINX Ltd. will start paying dividends for the first ...INV Design Ltd. just paid a dividend of $4.00 and its current earnings per share is $5. The current T-bill rate is 3 percent and DE’s risk premium is 12 percent. The net profit margin, asset turnover, and debt-to-equity ...Describe the characteristics of preferred shares.At the beginning of the year you bought 250 shares of Lycel Ltd. at $82 each. During the year you received dividends of $750. At the end of the year the stock is trading for $87 and you decide to sell all your shares. ...Calculate the annual arithmetic mean and geometric mean return on the following security, and state which method is more appropriate for the situation: purchase price = $30; first-year dividend = $5; price after one year = ...Post your question

0