Stock A pays a dividend of $3 per share next year. The discount rate is 10%.
Stock Valuation DIV/R
1. If you hold the stock for one year, what is the price for stock A you have to pay now (P0) ?
2. If you hold the stock for two years, what is the price for stock A you have to pay now (P0)?
3. If you hold the stock for three years, what would be the price for stock A three years from now (P3)?
4. If you hold the stock for two years, what would be the price for stock A two years from now (P2)?