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What is the price of up and up inc stock today

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Reference no: EM132929870

Up and Up Inc. (U&U) just paid a $1.40 per share annual dividend. The company is planning on paying the dividends of $1.50, $1.75, $2.00 a share over the next 3 years, respectively. After year 3, the dividend will be a constant $2.25 per share per year.

Question 1: What is the price of U&U stock today if the required return on similar stock with the same level of risk is 8%?

Question 2: What would be the price of U&U with the same required return as in 1, if the dividend increases with 2% constant annual growth from year 4 onwards?

Question 1: How can we find out the required return of the U&U stock?

Reference no: EM132929870

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