What is the expected rate of return for a stock

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Q1. What is the expected rate of return for a stock that is expected to pay $0.50 dividend next year and is currently selling for $9? The price of the stock next year is expected to be $10.59 by next year. Write answer as a decimal (i.e. do not change to a percent).

Q2. Microsoft has just paid a dividend of $1 per share (this dividend is already paid sometimes called Dividend 0). It is estimated that the companys dividend will grow at a rate of 35% in year 1 and 20% in year 2. The dividend is then expected to grow at a constant rate of 5% thereafter. The companys opportunity cost of capital is 11%, what is an estimate Microsofts stock using the nonconstant growth technique?

Reference no: EM132967940

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