Compute current fair price of the stock

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1. ABC Company paid a dividend on a common stock of $2.40 last year. Over the next year's, the dividend is expected to growth 6%, which is the constant growth rate for the firm. The required return on common stock (Ke) is 11%. Compute the current fair price of the stock (Po).

2. Assume the following information: You have $400,000 to invest. The current spot rate of Sudanese dinar (SDD)-$.00570; 90-day forward rate of the dinar-$.00569; 90-day interest rate in the US-40% 90-day interest rate in Sudan-4.2%. If you conduct covered interest arbitrage, what amount will you have after 90 days?

Reference no: EM131905413

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