Question: Use the one-period valuation model P = E/(1 + k ) + P1/(1 + k ) to price the following stocks (remember to decimalize percentages).
Use the one-period valuation model P = E/(1 + k) + P1/(1 + k) to price the following stocks (remember to decimalize percentages).
| Dividends (E = $) | Required return (k = %) | Expected price next year (P1 = $) | Answer: price today (P = $) |
|---|---|---|---|
| 1.00 | 10 | 20 | 19.10 |
| 1.00 | 15 | 20 | 18.26 |
| 1.00 | 20 | 20 | 17.50 |
| 0 | 5 | 20 | 19.05 |
| 0 | 5 | 30 | 28.57 |
| 0 | 5 | 40 | 38.10 |
| 1.00 | 10 | 50 | 46.36 |
| 1.50 | 10 | 50 | 46.82 |
| 2.00 | 10 | 50 | 47.27 |
| 0 | 10 | 1 | 0.91 |
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