What is the estimated stock price at the end of year three

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1. Company X just paid $1 dividend per share. The dividend payment is forecasted to grow at 25%, 18% and 15% for each of the following three years and then stay at 8% every year thereafter. Suppose the required return for the stock is 20%. What is the estimated stock price at the end of year 3? Round your answer to two decimal places.

2. Stock A is selling at $50. Its next dividend is expected to be $2 and to increase at a constant rate of g each year. Suppose the required return for the stock is 12%. The value of constant growth rate g is ______%.

Reference no: EM132056949

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