In: Finance
YA Msafer recently paid a $2 annual dividend. The company is
projecting that its dividends will grow by 20 percent next year, 12
percent annually for the two years after that, and then at 6
percent annually thereafter. Based on this information, how much
should YA Msafer common stock sell for today if her required return
is 10.5%?
Please Solve As soon as
Solve quickly I get you two UPVOTE directly
Thank's
Abdul-Rahim Taysir
Year | Particulars | Cash flow | × discount rate | Present value |
1 | Dividend | 2.40 | 0.90498 | $ 2.17 |
2 | Dividend | 2.69 | 0.81898 | $ 2.20 |
3 | Dividend | 3.01 | 0.74116 | $ 2.23 |
3 | Share price | 70.92 | 0.74116 | $ 52.56 |
3.01*(1+ 0.06) /( 0.105-0.06) | ||||
Stock price today | $ 59.16 |
Stock price is 59.16