Using dividend discount model-what would be price of stock

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Reference no: EM131529242

A stock is expected to pay a dividend of $0.50 in one quarter, and the stocks expected price in one quarter is $15.00. The equity cost of capital is 6% per year, compounded annually.

a. What is the price of stock today?

b. What is the dividend yield?

c. What is the capital gain rate?

d. Suppose the 0.50 dividend is expecteds to continue indefinately. Using the dividend discount model, what would be the price of one stock?

e. If Dividends are instead expected to grow at a rate of 2% per year, what would be the price of one share of stock?

Reference no: EM131529242

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