Last year Timco paid a 5 per share dividend. The beta is 1.7, the market is expected to earn 11%, and the risk free rate is 2%. If dividends remain at 5 per year forever, what is a fair price?

Fair Price?

 
2.  What if Timco's dividends grow at 6% per year forever?

Fair Price?

 
3. Find the dividend yield and capital gains yield for the stock in number

Dividend Yield?

Capital Gains Yield?

4.  What if Timco's dividends grow at 6% for one year, than at 10% forever after that?

Answer rating: 100% (QA)

To calculate the fair price of Timcos stock when dividends remain constant at 5 per share per year forever we can use the Gordon growth model which st... View the full answer