# Question: The Wonder Products Company is expanding fast and therefore will

The Wonder Products Company is expanding fast and therefore will not pay any dividends for the next 3 years. After that, starting at the end of year 4, it will pay a dividend of $0.75 per share to its common shareholders and increase it by 12% each year until it pays $1.50 at the end of year 10. After that it will pay $1.50 per year forever. If an investor wants to earn 15% per year on this investment, how much should he pay for the stock?

## Relevant Questions

The WedLink Corporation just paid a dividend of $1.25 to its common shareholders, and announced that it expects the dividends to grow by 25% per year for the next 3 years, then drop to a growth rate of 16% for an additional ...What are the returns on the followinginvestments?Calculate the standard deviation of the U.S. Treasury bills, long-term government bonds, and large company stocks for 1990 to 1999 from Table 8.1. Which had the highest variance? Which had the lowest variance?Use the information in the following to answer the questions below.a. What is the expected return of each asset?b. What is the variance of each asset?c. What is the standard deviation of eachasset?Use the same four assets from Problem 27 in the same three portfolios. What are the expected returns of the four individual assets and the three portfolios, if the current SML is plotting with an intercept of 3% (risk-free ...Post your question