A stock you're valuing paid an annual dividend of $3.70. Dividends have increased at a steady 1.4 percent over the past 15 years, and you expect that to continue.

A. If the required rate of return for the stock is 13.8 percent, what is its fair present value?
B. If the required rate of return for the stock is 16.8 percent, what should its fair value be four years from now?

Answer rating: 100% (QA)

A To calculate the fair present value of the stock we can use the dividend discount model Fair Valu... View the full answer