Predicted price of the company

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Figure out a price that it can sell at. you believe that the company will pay its first dividend in 8 years.a t that point it will pay a dividend of 1.80, which it will then increase at 6.5% each year. you think that the appropriate discount rate for the company is 9.5%

a) Based on your analysis, what is the predicted price of the company today?

b) You suggest a price of 24 for company. Given this price, what is the project return on the first day of trading,assuming that market participants share your views and price the stock equal the predicted price from a?

c) What do you expect the stock price to be n seven years (one year before the first dividend payment)? in fact, the stock price equals to 45, at what rate r would this be the correct price (assuming nothing else has changed, so that the first dividend is still expected to be 1.80)?

Reference no: EM131055613

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