Question: You expect a stock's future dividends will grow at a constant rate of 4.5% per year. If its next expected dividend of $2 will occur

You expect a stock's future dividends will grow at a constant rate of 4.5% per year. If its next expected dividend of $2 will occur one year from now and the the stock's required rate of return is 13.2%, what do you expect the price to be one year from now, immediately after the first dividend is paid? Round your answer to the nearest penny.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Country Charm Shoppe sells a wide variety of home dcor, specializing in selling vintage items as well as items that are made from recycled and repurposed materials. The Country Charm Shoppe purchases...

8 -tre 2.5 points You expect a stock's future dividends will grow at a constant rate of 2.2% per year. If its next expected dividend of $9 will occur one year from now and the the stock's required...

7 2.5 points You expect a stock's future dividends will grow at a constant rate of 2.3% per year. If its next expected dividend of $4 will occur one year from now and the the stock's required rate of...

2 points HaysCo's stock will pay a dividend of ( $ 6.71 ) one year from today and another dividend of ( $ 8.17 ) two years from today. After the second dividend, future dividends will grow at a...

Your portfolio contains $1,000 of Barnes stock and $17,000 of Harper stock. Barnes' beta is 0.53 and Harper's beta is 1.16. If the expected return for the overall stock market is 9.2% and the T-Bill...

19 2.5 points 2 You expect Commodore Company stock to pay a dividend of $5.04 exactly one year from today and a dividend of $401 exactly two years from today. After the second dividend future...

20 25 points Cocke Company stock will pay a dividend one year from now of $8.39, and you expect future dividends to grow at a constant rate of 43 per year. If Cocke's batai 10, the risk-free rate is...

2 points Your firm anticipates paying its next annual dividend (D1) of $275, and you expect future dividends will grow at a constant rate of 3% per year indenitely if the current stock price is...

Davis stock will pay its next dividend of $5.03 exactly one year from today and a second dividend of $4.42 exactly two years from today. After the second dividend, future dividends will grow at a...

Davis stock will pay its next dividend of $6.42 exactly one year from today and a second dividend of $7.67 exactly two years from today. After the second dividend, future dividends will grow at a...

Cumberland Co's stock will pay its next dividend of $5.04 exactly one year from today and a second dividend of $5.48 exactly two years from today. After the second dividend, Cumberland's future...

Suppose a French bottle of champagne costs 20 euros. a. If the euro-dollar exchange rate is 0.8 euro per dollar, so that a dollar can buy 0.8 euro, how much will the champagne cost in the United...

A copper pipe with a thermal conductivity of 400 W/mK is used to transfer heat from a hot fluid at 100C to a cold fluid at 20C. The copper pipe has a diameter of 0.2 m and a length of 1 m. How much...

The canon is a settled and incontestable list of the most highly and widely esteemed works. True False

Draw a class diagram and its relationship based on the following statements. You can use any UML tool/software to represent your class diagram. Do NOT copy and paste your diagram, use the attachment...