Question: Problem 2 (9 marks) Horse and Buggy Inc. is in a declining industry. Sales, earnings, and dividends are all shrinking at a rate of 10%

Problem 2 (9 marks) Horse and Buggy Inc. is in a

Problem 2 (9 marks) Horse and Buggy Inc. is in a declining industry. Sales, earnings, and dividends are all shrinking at a rate of 10% per year. Investors have a required return of 15% and the next dividend is expected to be $3. a. What is the value of a share? b. What price do you forecast for the stock next year? c. Calculate the dividend yield and the capital gain (loss) yield

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