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What is the price of the stock today

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Problem 1: An analyst estimates that Manila Bay Co. will pay the following dividends: D1 = P3.0000, D2 = P3.7500, and D3 = P4.3125. The analyst also estimates that the required rate of return on Manila Bay Co.'s stock is 12.2%. After the third dividend, the dividend is expected to grow by 8% per year forever. What is the price of the stock today?

a. P81.40

b. P87.22

c. P85.27

d. P84.16

Problem 1: A common share has just paid a dividend of P2. The expected long-run growth rate for this stock is 15%. The investors require a 19% rate of return. What is the price of the share?

a. P57.50

b. P71.86

c. P62.25

d. P64.00

Reference no: EM132787166

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