westher
April 21st 2006, 09:49 AM
An investor wishes to purchase a stock today, sells it at the end of 3 years, and has the following estimates of dividends paid at the end of each year:
Year 1: $1.1;
Year 2: $1.2;
Year 3: $1.35.
the investor estimates the dividend yield to be 4% at the end of the third year. She anticipates selling immediately following receipt of the third dividend. What would she be willing to pay for the stock today if she has a 14% required rate of return?
The answer is $27.86.
Can someone help me please..
Year 1: $1.1;
Year 2: $1.2;
Year 3: $1.35.
the investor estimates the dividend yield to be 4% at the end of the third year. She anticipates selling immediately following receipt of the third dividend. What would she be willing to pay for the stock today if she has a 14% required rate of return?
The answer is $27.86.
Can someone help me please..