The last supernormal growth dividend is

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Bobcat Corp expects to achieve a dramatic increase in its short-run growth rate to 35 percent annually for the next 3 years. After this time, growth is expected to return to the long-run constant rate of 10 percent, and investors require a 15 percent rate of return. Assume that a dividend of $4 has just been paid. i.e. D0=$4

1. The last supernormal growth dividend is?

a. $5.32 b. $5.86 c. $6.08 d. $9.84 e. $13.29

2. What price should the stock of Bobcat Corp be selling at the end of its supernormal growth?

a. $65.60 b. $106.40 c. $196.80 d. $216.48 e. $292.38

3. at what price should the stock of Bobcat Corp be selling today?

a. $146.10 b. $159.02 c. $126.15 d. $180.99 e. $157.84

Reference no: EM132010289

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