Question: The following questions are based on Chapter 9 lecture note. Assume that the dividend will grow at the rate of 5% (not g=4%) , but
The following questions are based on Chapter 9 lecture note. Assume that the dividend will grow at the rate of 5% (not g=4%) , but all other values are the same. a. Find the expected dividends stream for the next 4 years. b. Estimate the present value of this stock based on the Discounted Dividend Model (set N=4). c. Estimate the present value ((P_0 ) ) of this stock based on the Constant Growth Model. d. Estimate the prices at t=1 ((P_1 ) ) and t=2 ((P_2 ) ) using the Constant Growth Model. e. Find Divined yield, Capital gains yield, and Total return.
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