1. You expect stock x to pay dividends according to the schedule below. you expect to sell...
Question:
1. You expect stock x to pay dividends according to the schedule below. you expect to sell the stock for $150 at the end of the holding period. if your opportunity cost of capital is 5.6%, what is the most that you will pay for stock x? Indicate your key strokes as well as your final answer.
year(s) dividend ($)
1 - 3 4.75
4-5 4.78
6 4.82
7-10 4.83
2. Based on the arrival of news about stock x, you have updated your beliefs about stock x's expected dividends. you now believe that stock x will pay dividends according to the schedule below. your opportunity cost of capital is still 5.6%.
year(s) dividend ($)
1-3 4.75
4-5 4.78
6 - indefinite dividend growth rate of 2% per year
what is the most that you will pay for stock x? Indicate your key strokes as well as your final answer
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill