PART 1:

Star Light & Power increases its dividend 3.2 percent per year every year. This utility is valued using a discount rate of 12 percent, and the stock currently sells for $55 per share. If you buy a share of stock today and hold on to it for at least three years, what do you expect the value of your dividend check to be three years from today?

Dividend:

PART 2:

Carter Communications does not currently pay a dividend. You expect the company to begin paying a dividend of $3.40 per share in 10 years, and you expect dividends to grow perpetually at 4.4 percent per year thereafter. If the discount rate is 11 percent, how much is the stock currently worth?

Price:

PART 3:

Given the information below for Seger Corporation, compute the expected share price at the end of 2020 using price ratio analysis. Assume that the historical (arithmetic) average growth rates will remain the same for 2020. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Year

2014

2015

2016

2017

2018

2019

Price

$

65.90

$

71.80

$

70.50

$

68.00

$

89.50

$

104.90

EPS

2.75

3.46

4.26

4.96

7.80

8.80

CFPS

8.07

8.88

9.19

10.92

12.28

13.42

SPS

42.30

47.30

46.70

50.20

61.40

69.40

	Share Price
Using PE ratio
Using P/CF ratio
Using P/S ratio