Zycard, Inc , has determined that stockholders require a 15 percent rate of return to invest in its common stock The last dividend paid by the company was $2 50 per share a What will be the value of Zycards stock if investors expect future dividends to grow at a constant annual rate of (1) 0 percen...

a D 0 250 1 2 3 b One method used to estimate the future grow ...

Zycard, Inc., has determined that stockholders require a 15 percent rate of return to invest in its

Question:

Zycard, Inc., has determined that stockholders require a 15 percent rate of return to invest in its common stock. The last paid by the company was $2.50 per share.
a. What will be the value of Zycard’s stock if investors expect future dividends to grow at a constant annual rate of?
(1) 0 percent,
(2) 5 percent,
(3) 10 percent?
b. Describe what steps you might take to estimate the appropriate future growth rate for Zycard.

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...