Delta currently trades at a price of $44.55 and just paid a dividend of $0.43:

• The long-term historical growth rate of dividends for the S&P 500 is 6%.   Assume the dividends grow at 6% in perpetuity and the discount rate is 8%, What is your estimated price of delta.
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• Over the last three years, dividends for the S&P 500 have grown at a rate of 9.8%. Assume that dividends grow at this rate for the next five years.
• What perpetuity dividend growth rate is needed to justify its current price of $46.56? Assume the discount rate

Answer rating: 100% (QA)

Using the formula P D1rg Given P 4455 D1 043 r 8 We ... View the full answer