Question

The Doug and Bob Company currently pays a dividend of $2.00. The company plans to increase the dividend for the next four years at 10%. After four years, the growth rate will drop to 4% per year forever. Given a required return of 12%, what would you pay for the stock today (approximately)?

$104

$32

$38

$34

$48

Kaci Co. is expected to pay the following dividends over the next three years: $6, $3, and $1. Afterwards, the company pledges to maintain a constant 5% growth rate in dividends forever. If the required return on the stock is 10%, what is the current share price (approximately)?

$21

$27

$24

$33

$20

Duke stock’s dividend per share (DPS) last year was approximately what from the following quote.

52 weeksYldVolNet

Hi LoStockDiv%PE100sHiLoCloseChg

49 20Duke?2.318209454244.200.56

$1.02

$0.25

$4.07

$2.35

$2.89

Answer 1

1) Ans: $32

Price of stock is the present value of dividends plus present value of terminal value of dividends.

Calculations:

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2) $24

Calculations:

Formulas used:

In Q3 values are not clear