1. Dividend Initiation and Stock Value A firm does not pay a dividend.It is expected to pay its first dividend of $ 0.20 per share in three years.This dividend will grow at 11 percent indefinitely.Using a 12 percent discount rate, compute the value of this stock.
2. P / E Ratio Model and Future Price New York Times Co. (NYT) recently earned a profit of $ 1.21 per share and has a P / E ratio of 19.59.The dividend has been growing at a 7.25 percent rate over the past six years.If this growth rate continues, what would be the stock price in five years if the P / E ratio remained unchanged?What would the price be if the P / E ratio increased to 22 in five years?