Part a. Green Tree Corporation is paying a dividend of $4 today. It expects dividends to...

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Part a. Green Tree Corporation is paying a dividend of $4 today.It expects dividends to grow at 25 percent for the next three yearsand to stabilize at 10 percent per year thereafter.

a. If the required rate of return of this corporation is 15percent, what is the current price of this corporation's stock?

b. What percentage of the current stock price is due to thedividends in the first three years?

c. What percentage of the current stock price is due to thedividends from Year 4 onwards?

d. Discuss the results of Parts b and c above.

PLEASE show how you would get answers usingExcel!!

Answer & Explanation Solved by verified expert
4.3 Ratings (890 Votes)
AnswerCurrent price of this corporations stock 12722WorkingAnswer bPV of dividends in the first three years 1421Percentage of the current stock price is due    See Answer
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Part a. Green Tree Corporation is paying a dividend of $4 today.It expects dividends to grow at 25 percent for the next three yearsand to stabilize at 10 percent per year thereafter.a. If the required rate of return of this corporation is 15percent, what is the current price of this corporation's stock?b. What percentage of the current stock price is due to thedividends in the first three years?c. What percentage of the current stock price is due to thedividends from Year 4 onwards?d. Discuss the results of Parts b and c above.PLEASE show how you would get answers usingExcel!!

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