Q1. A stock paid a dividend of $2.44 today P(0). If the growth rate of dividends is expected to be 7% and investors demand a 15% rate of return what will be the price of the stock in year 4? Q2. Deep...

1 answer below »
Hi I need to show the work for the questions


Q1. A stock paid a dividend of $2.44 today P(0). If the growth rate of dividends is expected to be 7% and investors demand a 15% rate of return what will be the price of the stock in year 4? Q2. Deep River company is expected to pay a dividend of $3.00 next year. Its dividends are expected to grow at a rate of 5%. If the price of the stock is $65, what rate of return are investors demanding? Q3. A company has 500 shares. What is the minimum number of shares required for a minority shareholder to elect one board member out of 4 members to be elected? Q4. Harris company paid a dividend of 1.60 today. It expects dividend payments to increase by 15% every year for the next three years before resuming a normal growth of 6%.  What should you pay for this stock if you demand a 16% rate of return?
Answered Same DaySep 21, 2021

Answer To: Q1. A stock paid a dividend of $2.44 today P(0). If the growth rate of dividends is expected to be...

Chirag answered on Sep 22 2021
161 Votes
Sheet1
    Q1.
    A stock paid a dividend of $2.44 today P(0). If the growth rate of dividends is expe
cted to be 7% and investors demand a 15% rate of return what will be the price of the stock in year 4?
    Gordon Growth Model
    P = D1/ r - g where
    P = price of stock
    D1 = Expected Dividend amount for next year
    g = Expected growth rate of dividends
    r = required rate of return
    By using Gordon Growth Model, price of stock in year 4 will be
        Year 1    Year 2    Year 3    Year 4    Year 4
    Dividends    2.6108    2.7936    2.9891    3.1983    3.1983
    PV...
SOLUTION.PDF

Answer To This Question Is Available To Download

Related Questions & Answers

More Questions »

Submit New Assignment

Copy and Paste Your Assignment Here