i have a final in a couple of hours but there are two problems that i've been breaking my head but not being able to find out how they got the answer -.-;; the first problem is:
ABC's common stock dividend yield is 2.1%. the company just paid a dividend of $1, it is expected to pay a dividend of $1.07 one year from now, and dividend are expected to grow at this same rate indefinitely. What is the required rate of return on ABC's stock? The answer is 9.1% but not matter which formula I use i still can't get the answer...
the second questions is: Boomer products, Inc., manufactures "no-inhale" cigarettes. As their target customers age and pass on, sales of the product are expected to decline. Thus, demographics suggest that earning and dividends will decline at a rate of 3% annually forever. the firm just paid a dividend of $1.50. Given a required return of 12%, the stock should sell for: the answer is $9.70.
and yet again i've tried everything and still dont get it.. im about to go mad.. plz help me!!!
ABC's common stock dividend yield is 2.1%. the company just paid a dividend of $1, it is expected to pay a dividend of $1.07 one year from now, and dividend are expected to grow at this same rate indefinitely. What is the required rate of return on ABC's stock? The answer is 9.1% but not matter which formula I use i still can't get the answer...
the second questions is: Boomer products, Inc., manufactures "no-inhale" cigarettes. As their target customers age and pass on, sales of the product are expected to decline. Thus, demographics suggest that earning and dividends will decline at a rate of 3% annually forever. the firm just paid a dividend of $1.50. Given a required return of 12%, the stock should sell for: the answer is $9.70.
and yet again i've tried everything and still dont get it.. im about to go mad.. plz help me!!!