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    jjosep00's Avatar
    jjosep00 Posts: 1, Reputation: 1
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    #1

    Apr 20, 2009, 05:51 PM
    How would i calculate the value of the stock ?
    Richards Industries just paid an annual dividend of $1.50 and is expected to pay annual dividends of $1.65 and $2.805 per share the next two years, respectively. After that, the firm expects to maintain a constant dividend growth rate of 5 percent per year. What is the value of this stock today if the required return is 13 percent?
    dawgsnkats's Avatar
    dawgsnkats Posts: 130, Reputation: 7
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    #2

    Apr 20, 2009, 06:43 PM

    jjosep00, the required return is 13%. The last dividend paid was 1.50. Divide 1.5 by 13% and the value of the stock is $11.54 per share. Using the same method, the forcasted values for the next two years would be $12.69 and $21.58 respectively.
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