What should be paid for overland common stock

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Reference no: EM131891025

1. Which of the following amounts is closest to what should be paid for Overland common stock? Overland has just paid a dividend of $0.73. These dividends are expected to grow at a rate of 6.4% in the foreseeable future. The risk of this company suggests that future cash flows should be discounted at a rate of 11.9%. Show your answer to the nearest $.01. Do not use the $ sign in your answer.

2. Which is the amount that should be paid for a stock that will pay a dividend of $1.83 in one year and $2.15 in two years? After that, the stock price will grow at a constant 5% per year forever. The appropriate discount rate is 12%. Show your answer to the nearest $.01. Do not use the $ sign in your answer.

Reference no: EM131891025

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