Question: please explain step by step The most recently paid dividend by Bridges & Associates was $0.625 per 5 hare. For the coming 3 years, the
The most recently paid dividend by Bridges \& Associates was $0.625 per 5 hare. For the coming 3 years, the annual growth of its dividend is expected to be 20%,25% and 35% respectively. After 3 years, the dividend growth will slow down to a constant rite of 6% per year. The required rate of return on the stock of Bridges \& Associates is 10%. 1. What would be the value of the stock today? 2. What would be the value of the stock 5 years from today? 3. If market is in equilibrium, calculate the total return stock imvestors expect to earn in year 1. 4. If market is in equilibrium, calculate the dividend yield and capital gains yleld stock investors expect to earn in Year 5 5. If an ffrvestor expects to earn a total return of 12%, is the stock currently over valued or under-valued? Explain
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