Question

You expect a share of stock to pay dividends of $1.00, $1.25, and $1.50 in each of the next 3 years. You believe the stock will sell for $20 at the end of the third year.
a. What is the stock price if the discount rate for the stock is 10%?
b. What is the dividend yield?
Dividends:
Year 1.......... $1.00
Year 2.......... $1.25
Year 3.......... $1.50
Discount rate........ 10.00%
Stock price after 3 years.. $20.00



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  • CreatedSeptember 19, 2013
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