Bobcat Corp expects to achieve a dramatic increase in its short-run growth rate to 35 percent annually for the next 3 years. After this time, growth is expected to return to the long-run constant rate of 10 percent, and investors require a 15 percent rate of return. Assume that a dividend of $4 has just been paid. i.e. D0=$4
1. The last supernormal growth dividend is?
a. $5.32 b. $5.86 c. $6.08 d. $9.84 e. $13.29
2. What price should the stock of Bobcat Corp be selling at the end of its supernormal growth?
a. $65.60 b. $106.40 c. $196.80 d. $216.48 e. $292.38
3. at what price should the stock of Bobcat Corp be selling today?
a. $146.10 b. $159.02 c. $126.15 d. $180.99 e. $157.84