Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 8) mack industries is not expected to pay a divide

8) Mack Industries is not expected to pay a dividend over the next four years....

90.2K

Verified Solution

Question

Finance

image

8) Mack Industries is not expected to pay a dividend over the next four years. At the end of the fifth year, the company anticipates that will pay a dividend of $1.00 per share. This dividend is then expected to grow at a constant rate of 5% per year thereafter. The required rate of return on the company's stock is 1 1%. Compute the current price of the stock today 9) Datasecure Inc. has hit upon a new idea for security of information on the internet. As a result, its annual dividends are expected to increase at a constant rate of 7% per year indefinitely. It paid a dividend of S5 just yesterday. The required rate of return on Datasecure's stock is 13% per year a) What is the price of Datasecure's stock today? b) What would be the price of Datasecure's stock today if it were a supernormal growth stock with a dividend growth rate of 18% for the first two years, then a constant growth rate of 7% indefinitely? Assume that the required rate of return on the stock is still 13% per year

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students