Assume that the dividend will grow at the rate of 5% (not g=4%) in slide #11, but
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Question:
Assume that the dividend will grow at the rate of 5% (not g=4%) in slide #11, but all other values are the same.
a. Find the expected dividends stream for the next 4 years.
b. Estimate the present value of this stock based on the Discounted Dividend Model (set N=4).
c. Estimate the present value ((P_0 ) ?) of this stock based on the Constant Growth Model.
D. Estimate the prices at t=1 ((P_1 ) ?) and t=2 ((P_2 ) ?) using the Constant Growth Model.
E. Find Divined yield, Capital gains yield, and Total return.
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