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##### Three Finance Questions

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Question;1) Suppose the company just paid dividend of \$1. The dividends are expected to grow at 20% in Year 1 and 15% in Year 2. After that, the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock. 2) Suppose the company just paid dividend of \$1. The dividends are expected to grow at 25% in Year 1 and 20% in Year 2, and 15% in Year 3. After that, the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.3) Suppose the company will not pay any dividends in Years 1 and 2. Suppose that the company pays dividend of \$1 in Year 3 and after that the dividends will grow at 20% for the next two years. After that the dividends will grow at a constant rate of 5% forever. If the required rate of return is 10%, compute today's price of the stock.

Paper#49695 | Written in 18-Jul-2015

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