Fight Finance

Courses  Tags  Random  All  Recent  Scores

Scores
keithphw$6,011.61
Jade$1,815.80
Boeti$1,002.09
ZOE HY$860.33
Chu$789.98
royal ne...$750.00
Leehy$713.33
Visitor$650.00
JennyLI$625.61
Visitor$590.00
Visitor$555.33
Visitor$550.00
Visitor$550.00
Visitor$540.00
Visitor$500.00
Yizhou$489.18
Visitor$480.00
Visitor$480.00
Visitor$470.00
Visitor$464.70
 

Question 517  DDM

A stock is expected to pay its next dividend of $1 in one year. Future annual dividends are expected to grow by 2% pa. So the first dividend of $1 will be in one year, the year after that $1.02 (=1*(1+0.02)^1), and a year later $1.0404 (=1*(1+0.02)^2) and so on forever.

Its required total return is 10% pa. The total required return and growth rate of dividends are given as effective annual rates.

Calculate the current stock price.




Copyright © 2014 Keith Woodward