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Determining the current stock price

Please assist with the following problem.

The dividend per share in one year is $2. In year two it is $4 a share. Then the dividend will grow at 5% per year after that. The expected rate of return is 12%.

Q1. What is the current stock price?

Q2. What is the expected price of the stock in one year?

Q3. The expected return of 12% equals dividend yield plus capital appreciation

Please show formula and calculation in simple terms.

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Finance Basics: Determining the current stock price

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Determining the current stock price

Reference No:- TGS01451792

Have a Question? (oR Write a Review)

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Solution Preview :

Prepared by a verified Expert

Finance Basics: Determining the current stock price

Reference No:- TGS01451792

Recent Questions Asked Finance Basics

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