The rate of return for similar-risk common stocks

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Reference no: EM131300272

1. Would you pay $30.00 for a stock for today if the following facts were known?

The dividend forecast for the next three years is: D1 = $0.75; D2 = $0.75; D3 = $1.00; D4 = $1.00.

The price forecast in three years is for each share to be worth $40.00.

The market rate of return for similar-risk common stocks is 16%.

2.. The forecast for Company B stock dividends for the next three years is: D1 = $1.25; D2 = $1.85; D3 = $2.50. The forecast price of a share in three years of $75.00. The rate of return for similar-risk common stocks is 12%. What is the value today of Company Z common stock?

Reference no: EM131300272

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