Stock based on the discounted dividend model

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Reference no: EM132027006

1. As the hurdle rate (i.e., the opportunity cost of capital) is increased, the NPV of a specific project will:

A. stay the same

B. increase

C. decrease

D. decrease to zero, then remain constant

E. increase to zero, then remain constant

2. ABC stock is expected to pay a $4/sh dividend 1 year from today. If dividends are expected to grow at 5%, and investor's required expected rate of return for this stock is 15%, what is the estimated value of the stock based on the discounted dividend model?

$20

$30

$40

$60

Reference no: EM132027006

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