Question: please expalin in details Assume you require 13.7% return. A company has common stock which is expected to have a dividend of $3.01 at the

please expalin in details

  1. Assume you require 13.7% return. A company has common stock which is expected to have a dividend of $3.01 at the end of year 5. After year 5, the stock's dividends are expected to have a growth rate of 5.4%. What price should be predicted for this stock at the end of year 5 (i.e., what is the terminal value)?

Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234

2. Assume you require 11.6% return. A company has common stock with dividends forecast for the upcoming five years (years 1-5) as shown below. After year 5, the stock's dividends are expected to have a growth rate of 4.9%. What price should be predicted for this stock at the end of year 5 (i.e., what is the terminal value)?

0 1 2 3 4 5
Dividends 1.0579 1.6603 2.0680 2.6917 3.5280

Enter your answer as a monetary amount rounded to four decimal places, but without the currency symbol. For example, if your answer is $90.1234, enter 90.1234

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!