What is current value of share of simtek stock to investor

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Reference no: EM13829414

Simtek currently pays a $2.50 dividend (D₀) per share. Next year’s dividend is expected to be $3 per share. After next year, dividends are expected to increase at a 9 percent annual rate for 3 years and a 6 percent annual rate thereafter.

A. What is the current value of a share of Simtek stock to an investor who requires a 15 percent return on his or her investment?

B. If the dividend in year 1 is expected to be $3 and the growth rate over the following 3 years are expected to be only 7 percent and then 6 percent thereafter, what will the new stock price be?

Reference no: EM13829414

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