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1. You are thinking of purchasing the FOX stock. You expect it to pay dividend of $1.5, $1.6, and $1.8 respectively for the next three years. You believe that you can sell the stock for $25 after you receive your dividend in the third year. If you require a return of 9% on investments of this risk, what is the maximum you would be willing to pay today?

2. Reddick Enterprises' stock currently sells for $35.50 per share. The dividend of $ 1.775 is projected to increase at a constant rate per year. the required rate of return on the stock is 9%. What is the stock's expected price 3 years from today? (Hint: You need to figure out the dividend's growth rate first.)

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Financial Management, Finance

Category:- Financial Management
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