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Analysts expect that H.O.T. Ltd will report earnings of $300 million one year from today. H.O.T.’s policy is to pay 75% of its earnings out in dividends (it paid its dividends already for this year). The company has 60,000,000 shares outstanding and the value of its book equity is $2.4 billion. Its required rate of return is 10%. Assume that the numbers above are representative of the foreseeable future.

(a) What is the expected rate of dividend growth?

(b) What is the price of the stock today?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92062696

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