Chapter $13$ Assignment

Financial Institutions

Name

A firm recently paid $($yesterday$)$ its annual dividend of $$0\mathrm{.}50$ per share. The dividend is expected to increase at a $10$ percent rate for the foreseeable future. The required return is $15$ percent.

What are the dividends for each of the next $3$ years? $($do not round the answers; carry them to $4$ decimals$)$

D$0($yesterday$)$

D$1(1$ year from now$)$

D$2(2$ years from now$)$

D$3(3$ years from now$)$

$2.$ Based on the constant growth model, what is the value of the stock today?

$3.$ What is the expected value or the stock $1$ year from today?

$4.$ If you buy the stock today, abthe price calculated in question $2$ and sell it in $1$ year at the price calculated in quostifit $3,$ what is your total percentage return on the stock? Note: be sure to include the dividend you would receive.