Janersquos sister-in-law a stockbroker at invest inc is, Ask an Expert

Economics

Jane’s sister-in-law, a stockbroker at Invest, Inc., is trying to get Jane to buy the stock of HealthWest, a regional HMO. The stock has a current market price of $25, its last dividend (D0) was $2.00, and the company’s earnings and dividends are expected to increase at a constant growth rate of 10%.

What is the company’s required rate of return?

How does the required rate of return change if the expected growth drops to 7%?

Using the required rate of return calculated in a, what is the company’s stock price in 20 years?

Healthy Supplies, an investor-owned healthcare supply chain, just paid a dividend (D0) of $4.57 per share. The current price of the stock (P0) is $43 per share. The firm’s required rate of return is 12%.

What is the stock’s constant growth rate?

How does the expected growth rate change if the required rate of return drops to 9%?

Using the expected growth rate calculated in a, what is the company’s stock price in 10 years?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91673602

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