What should be the current share price of this stock

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Reference no: EM131883711

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a. Header Motor, Inc., just paid an annual dividend of $2.00 per share on its common stock. Future dividends are expected to grow at a rate of 6 percent per year, indefinitely. If Header Motor required rate of return is 12 percent what should be the current share price of this stock?

b. LoRiders, Inc., just paid an annual dividend of $1.35 per share on its common stock. Dividends are expected to grow at a rate of 10 percent next year, 12 percent the year after, and 8 percent the year after that; subsewuent dividends are expect to grow at 5 percent per yeat therafter. If Header Motors required rate of return is 10 percent, what price should this stock sell for?

Reference no: EM131883711

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