A stock just paid an annual dividend of $2.1. The dividend is expected to grow...
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A stock just paid an annual dividend of $2.1. The dividend is expected to grow by 7% per year for the next 4 years. The growth rate of dividends will then fall steadily by 1% per year, from 7% in year 4 to 3% in year 8 and stay at that level forever.
The required rate of return is 12%.
a) What is the expected dividend in 8 years?
b) What is the expected stock price in 8 years?
c)What should be the current stock price?
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