A stock is expected to pay the following dividends:
| Cash Flows of a Stock | ||||||
| Time (yrs) | 0 | 1 | 2 | 3 | 4 | ... |
| Dividend ($) | 0.00 | 1.00 | 1.05 | 1.10 | 1.15 | ... |
After year 4, the annual dividend will grow in perpetuity at 5% pa, so;
- the dividend at t=5 will be $1.15(1+0.05),
- the dividend at t=6 will be $1.15(1+0.05)^2, and so on.
The required return on the stock is 10% pa. Both the growth rate and required return are given as effective annual rates.
What will be the price of the stock in three and a half years (t = 3.5)?
Question 218 NPV, IRR, profitability index, average accounting return
Which of the following statements is NOT correct?
When someone says that they're "buying American dollars" (USD), what type of asset are they probably buying? They're probably buying:
The expression 'you have to spend money to make money' relates to which business decision?
Question 526 real and nominal returns and cash flows, inflation, no explanation
How can a nominal cash flow be precisely converted into a real cash flow?
The Australian dollar's value was:
Did the Australian dollar or against the US dollar between these dates?
Which derivatives position has the possibility of unlimited potential gains?
Below is the Australian central bank’s cash rate.
From 2011 to 2017 the Australian central bank has implemented: