Pepsi is currently disbursing a dividend of Rs. 2.5 per share. The dividends are projected to grow
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Question:
Pepsi is currently disbursing a dividend of Rs. 2.5 per share. The dividends are
projected to grow at 4% per year for the next two years and then grow 8% per year
thereafter.
a. Calculate the expected dividend in year 4
b. What should be the expected price of this stock at the end of third year?
c. If you hold the stock, then what should be the current price. Compare your answer with part b. Will you hold the stock or sell it?
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