Horse and Buggy Inc. is in a declining industry. Sales, earnings, and dividends are all shrinking...

  

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Horse and Buggy Inc. is in a declining industry. Sales, earnings, and dividends are all shrinking at a rate of 10% per year. a. If r=20% and DIV₁ = $6, what is the value of a share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of a share b. If r=20% and DIV₁ = $6, What price do you forecast for the stock next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price c. If r=20% and DIV₁-$6, What rate of return should you expect if you buy the stock today and sell it in one year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Expected rate of returns % Horse and Buggy Inc. is in a declining industry. Sales, earnings, and dividends are all shrinking at a rate of 10% per year. a. If r=20% and DIV₁ = $6, what is the value of a share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Value of a share b. If r=20% and DIV₁ = $6, What price do you forecast for the stock next year? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price c. If r=20% and DIV₁-$6, What rate of return should you expect if you buy the stock today and sell it in one year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Expected rate of returns %

Answer rating: 100% (QA)

a The price is computed as shown below D1 ke ... View the full answer