I need help. I have been stumped for hours... What is the price of a stock today
ID: 2729022 • Letter: I
Question
I need help. I have been stumped for hours...
What is the price of a stock today if the most recent dividend was 2.50, the growth rate is 4.0% and the required rate of return is 15% 22.73 16.67 25.0 23.64 What is the estimated price of a stock going to be in 4 years if the most recent dividend paid was $1.00, the growth rate of dividends is estimated at 3 0% and the discount rate for the stock is 10 0%? 18.81 16.56 10.93 15.61 What is the dividend yield on a stock that pays a dividend of $1.45 next year and has an expected return of 13% along with a growth rate of 4%? 13.0% 8.32% 9.0% 10.0%Explanation / Answer
Solution.
Calculation of price of Stock.
Recent Dividend is = $2.50
Growth rate is 4%
Required rate of return = 15%
Price = 2.50 ( 1+0.04 ) / (15% - 4% )
= $23.64