1. If the dividend in year 0 is $1.20 and the growth rate is 3%, then the dividend in Year 7 is equal to:
a. $1.20 X (1.03)5.
b. $1.20 X (1.03)6.
c. $1.20 X (1.03)7.
d. $1.20 X (1.03)8.
2. You observe a stock price of $18.75. You expect a dividend growth rate of 5% and the next expected dividend payment is $1.50. What is the required return?:
3. A company is expected to pay their first annual dividend 3 years from now. That payment will be $1.50 a share. Starting in Year 4, the company will increase the dividend by 5% per year. The required return from common shareholders is 15%. What is the estimated value of this stock today?
This question was answered on: May 23, 2022
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