Mrsboyd1
Oct 15, 2010, 03:24 PM
The company has a current stock price of $36.00 and its last dividend was $2.40. In view of the company's strong financial position, its required rate of return is 12 percent. Dividends are expected to grow at a constant rate in the future what is the company's expected stock prices in five years?
leloup
Nov 25, 2010, 11:21 AM
The company has a current stock price of $36.00 and its last dividend was $2.40. In view of the company's strong financial position, its required rate of return is 12 percent. Dividends are expected to grow at a constant rate in the future what is the company's expected stock prices in five years?
36 = 2.4 / (12%-g)
g = 0.053 = 5.3%
in 5 yrs:
36(1+0.053)^5