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1) ABC Enterprises' stock is expected to pay a dividend of $1 per share. The dividend is projected to increase at a constant rate of 3.6% per year. The required rate of return on the stock is 19.9%. What is the stock's expected price 3 years from today (i.e. solve for P3)?

2) ABC’s last dividend paid was $2.4, its required return is 14.4%, its growth rate is 6.5%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?

3) A stock is expected to pay a dividend of $1.2 at the end of the year. The required rate of return is rs = 16.9%, and the expected constant growth rate is g = 6.5%. What is the stock's current price?

4) ABC Company's last dividend was $4. The dividend growth rate is expected to be constant at 17% for 2 years, after which dividends are expected to grow at a rate of 6% forever. The firm's required return (rs) is 12%. What is its current stock price (i.e. solve for Po)?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92802457

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