Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a share of stock has a dividend that is expected t

A share of stock has a dividend that is expected to grow at a constant...

90.2K

Verified Solution

Question

Finance

A share of stock has a dividend that is expected to grow at a constant perpetual rate. During the next year (t=0 to t=1), the dividend yield is expected to be 8.45%. The capital gains yield for the next year is expected to be 3.6%. Dividends are paid at years end. If the dividend paid at the end of the year (at t=1) is expected to be $6.49, what is a fair price for the stock in exactly 6 years from today?

Hello, my answer (to the above) differed from the professors. The correct answer is 94.96 - can you help me see how they got to this answer?

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

Biology
1.2K views

Which of the following layers is a primary germ layer that first appears in the...

Physics
1.2K views

Two conducting spheres of radii R and R are charged with charges Q and Q...

Geometry
1.2K views

A02 Q7 B is a point on the circumference of the circle O is the...

Calculus
1.2K views

Consider the following graph of a derivative f a At what a values do the...

Algebra
1.2K views

24x1 25 X 3 12 A 2x y 2 6y 3 12 B 12x y...

Algebra
1.2K views

Find the measure of angle Round to the nearest tenth x 18 98 9 Show...

Algebra
1.2K views

8x 3 9 f x 4x 1 Vertical Asymptote Horizontal Asymptote x 8 10 f...

Accounting
1.2K views

Tiny Co operates a motel business and has the following assets. ...

Accounting
1.2K views

If a customer order is placed on May 5, the company expects to begin processing...

Accounting
1.2K views

If our company issues bonds with a face value of $10,000,000, term of 5-years, interest...

Accounting
1.2K views

finance questions The excess of revenue over expenses in a business is called: ...

Accounting
1.2K views

In a make-or-buy decision, relevant costs include: unavoidable fixed costs avoidable fixed costs fixed factory...