Discussion:
1. If a stock is expected to pay an annual dividend of $20 this year, what is the approximate present value of the stock, given that the discount rate is eight percent and dividends are expected to grow at a rate of two percent per year?
2. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is five percent?
3.A company has two million shares outstanding. It paid a dividend of $2 during the past year, and expects that dividends will grow at six percent annually in the future. Stockholders require a rate of return of 13%. What would you expect the price of each share to be today, and what is the value of the company's common stock?
Each question must be about 75 words in length. Please show work. This needs to be completed 12/14/2015 at 8:00/20:00 pm eastern standard time.