Sandra is the Chief Executive Officer for Us Bank. She approached you to look at the price of the stock and dividend yield. She presented you with the following information. (10 Marks).
A. Current estimates are for Us Company to pay dividends of $2.50, $3.25, and $3.00 throughout the following three years, respectively. Toward the end of three years, you envision selling your stock at a market price of $100.00. If it is anticipated that 6% return, what is the price of the stock?

Us forecasts to pay a $6.50 dividend one year from now, which constitutes 100% of its income. This will provide investors with a 9% anticipated return. Instead, we decide to plow back 30% of the income at the company's current profit for a value of  15%. What is the approximate value of the stock before and after the blowback decision?

Answer rating: 100% (QA)

A To calculate the price of the stock we need to use the dividend discount model Price of stock Divi... View the full answer