A stock that is constant growth whose last dividend (paid yesterday) was $1.50 and whose dividend is expected to grow indefinitely at 4%:
a. what would the expected return be if the stock was currently selling for $30.29?
b. what would the stock price be if the expected growth of dividends was zero %?
c. now assume that the stock is expected to experience super normal growth of 30% over the next 3 years, and then return to the normal expected growth of 6% for the long-term. What is the stock’s value under these circumstances?
d. now assume that the stock is expected to experience zero growth during the first three years and then resume the steady growth of 6% in the fourth year. What is the stock’s value today?