1. Fincorp will pay a year-end dividend of $2.40 per share, which is expected to grow at a rate of 4% for the indefinite future. The discount rate is 12%.
What is the stock selling for?
2. You expect a share of stock to pay dividends of $1.00, $1.25, and $1.50 in each of the next 3 years. You believe the stock will sell for $20 at the end of the third year.
What is the stock price if the discount rate for the stock is 10%?
3.Integrated Potato Chips paid a $1 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4% per year.
What is the expected stock price 3 years from now?