The bloomington electric company operates in a stable, Ask an Expert

Economics

The Bloomington Electric Company operates in a stable industry and therefore has predictable dividend growth of 8% per year. The most recent annual dividend was paid yesterday in the amount of $4. Assume the appropriate discount rate is 15%.

a. what is the current stock price?

b. Assuming the annual growth rates for the next three years is 20% each year; but starting the fourth year and after the growth rate remains constant at 8%. What is the current stock price under this scenario?

c. Assuming a dividend growth rate of 8%, what is the dividend yield of this stock if the current stock price is $40?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M9525607

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