Question: please answer a~c with steps and process Assume today is Jan. 1st, 2022, you observe that ADA Company's stock price is $40. Analysts forecast that
Assume today is Jan. 1st, 2022, you observe that ADA Company's stock price is $40. Analysts forecast that ADA's next dividend, to be paid at year end of 2022, will be $1.00. You also find the following historic annual return of the company ADA for the last 4 years. 2018 2020 2019 +14% 2021 +40% PTU's Returns -12% -10% a) Calculate the arithmetic (simple) average return of ADA's stock from its historical return data. b) Use the average historical return you calculated in a) as ADA's future expected annual return. With the information given, what is the expected stock price for ADA at the END of 2022? I c) If ADA's future dividend growth rate, g, is constant. What must be the value of this growth rate g if stock price today is $40, next dividend is $1, and the arithmetic (simple) average return you calculate in a) is cost of equity, RE
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