Calculate the current price of the stock

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Question 1: A Mining Company's oil reserves are being depleted, so its sales are falling. Also, because its pit is getting deeper each year, its costs are rising. Thus, the company has announced that it will be reducing its annual dividend by 5 percent a year for the next two years. After that, the company expects the growth of dividend will be constant at 7 percent. On 31st December 2018, the company paid a dividend of $5.00 per share. Investors require a 9 percent rate of return. What is the expected dividend for 31st Dec 2020.

Select one:

a. 5.00

b. 4.75

c. 4.51

d. 5.25

e. 5.51

Problem : Refer to Question 1. What is the horizon value?

Select one:

a. $226

b. $241

c. $263

d. $276

e. $230

Problem : Refer to Question 1. Calculate the current price of the stock.

Select one:

a. $211

b. $241

c. $193

d. $220

e. $230

Reference no: EM132467644

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