Find the expected dividend - stocks, Financial Management

Assignment Help:

You are considering the purchase of some shares of PECO Inc. common stock which paid a dividend of $1.50 today. You expect the dividend to grow at the rate of 7% per year for the next 3 years, and then at 5% forever. The interest rate is 8%. 

a) Find the expected dividend for each of the next four years?

b) What is the fair price of the stock today?

c) What is the fair price of the stock two years from now?

d) What is the expected annual rate of return for an investor who buys the stock today and sells it in two years?


Related Discussions:- Find the expected dividend - stocks

Explain why warrants are rarely exercised, Explain why warrants are rarely ...

Explain why warrants are rarely exercised unless the time to maturity is small? Warrants are hardly ever exercised until the time to expiration is small because the market pric

How premium and discount are determine while asset are ptm, Explain how the...

Explain how the premium and discount are determined while assets are PTM (priced-to-market). When would the law of one price prevail in international capital markets although if fo

Blue sky, Blue Sky It refers to laws that safeguard investors from bei...

Blue Sky It refers to laws that safeguard investors from being misled by investment people who misrepresent the significance value of investments to get the money of the finan

Organization and management of mutual funds, Organization and Management of...

Organization and Management of Mutual Funds: Structural Pattern Mutual Funds, usually formed as trusts, generally involve three parties viz., Settler of the trust or

What are the drawbacks of the payback, The drawbacks of the payback approac...

The drawbacks of the payback approach are as follows - Payback ignores the overall profitability of a project by ignoring post payback cash flows. In the illustration above the

Estimate the money in dollars have lost or gained, In January 2010 your fir...

In January 2010 your firm bought from an Italian firm goods payable in Euros worth EU2,000,000.  Suppose that at that time the exchange rate of the Euros was 1EU=$1.25.  Because th

Evaluate optimum price of the new machine, Q. Evaluate optimum price of the...

Q. Evaluate optimum price of the new machine? The optimum price will be the one which optimises total contribution over the five-year life of the new machine. Sales price o

Conversion value, Conversion value is the amount which investors wi...

Conversion value is the amount which investors will receive by immediately exchanging the bonds for equity stock and selling the stock at prevailing market

Cash flow& funds flow statement , Explain cash flow and funds flow analysis...

Explain cash flow and funds flow analysis with suitable example from an existing corporate entity for at least three years i.e. 2008, 2009.2010.

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd