Company paid $1 per share dividend yesterday. Constant growth with dividend a 4% each year.
What is the expected dividend in each of the next 3 years? My answer = $1.04 ($1.00 x .04 = .04 +$1.00)
If discount rate for stock is 12% at what price will the stock sell? My answer = $13.00 ($1.04/.12-.04)
What is the expected stock 3 years from now? My answer = $13.54 (Year 3 is $13.54 x .04 = .5416 + $13.00)
If I buy the stock and hold it for 3 years what payment would I receive and what is the NPV of those payments? I’m not sure where to go with this question.
