Host Corp. will pay a $2.40 dividend (D1) in the next 12 months. The required rate...
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Host Corp. will pay a $2.40 dividend (D1) in the next 12 months. The required rate of return (Ke) is 13 percent and the constant growth rate (g) is 5 percent. a. Compute the stock price (PO). b. If Ke goes up to 15 percent, and all else remains the same, what will be the stock price (PO)? c. Now assume in the next year, D1 = $2.70, Ke = 12 percent, and g is equal to 6 percent. What is the price of the stock? Host Corp. will pay a $2.40 dividend (D1) in the next 12 months. The required rate of return (Ke) is 13 percent and the constant growth rate (g) is 5 percent. a. Compute the stock price (PO). b. If Ke goes up to 15 percent, and all else remains the same, what will be the stock price (PO)? c. Now assume in the next year, D1 = $2.70, Ke = 12 percent, and g is equal to 6 percent. What is the price of the stock?
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Answer rating: 100% (QA)
a The current stock price is given by discounting back the expected future divid... View the full answer
Related Book For
Foundations of Financial Management
ISBN: 978-1259194078
15th edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen
Posted Date:
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