a . You are considering buying an income stock that has paid dividends every year. The dividend
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Question:
a You are considering buying an income stock that has paid dividends every year. The dividend payment has been increasing steadily at the rate of per year and the most recent payment was $ per share made today.
If you are expecting the company to continue the practice in the foreseeable future, how much would you pay for this stock?The annual rate of return from similar stocks is
b Based on the price you calculated, what is the PVGO Present Value of Growth Opportunity of stock? For zero growth price, assume that the dividend payment is fixed at $ per share.
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