The Diminishing Reserves Mining Company (DRMC) expects to pay a dividend
of $100 in fiscal 2012. DRMC expects its dividends to grow from $100 at a compound
growth rate of 15% per year for fiscal years 2013 through 2017. DRMC then expects
dividends to grow from the 2017 level at a compound growth rate of 8% per year for fiscal years 2018 through 2023. Thereafter, DRMC expects to cut dividends at a compounded rate of 10 percent per year from the fiscal 2023 level for the foreseeable future. Shareholders feel that the required rate of return is 15 percent.
a. What is a fair market share price for DRMC at the BEGINNING of the fiscal year 2024?
b. What is a fair market share price for DRMC at the BEGINNING of the fiscal year 2018?
c. What is a fair market share price for DRMC at the BEGINNING of the fiscal year 2012?
d. Suppose an investor bought a share of DRMC at the fair market price at the BEGINNING
of the fiscal year 2012 and sold it at the fair market price at the BEGINNING of fiscal
year 2013. What is the investor's expected dividend yield, capital gains yield, and total
yield?
e. Suppose an investor bought a share of DRMC at the fair market price at the BEGINNING
of the fiscal year 2024 and sold it at the fair market price at the BEGINNING of fiscal
year 2025. What is the investor's expected dividend yield, capital gains yield, and total
yield?
****** I found "a" and "b" ******
Please help! thanks
of $100 in fiscal 2012. DRMC expects its dividends to grow from $100 at a compound
growth rate of 15% per year for fiscal years 2013 through 2017. DRMC then expects
dividends to grow from the 2017 level at a compound growth rate of 8% per year for fiscal years 2018 through 2023. Thereafter, DRMC expects to cut dividends at a compounded rate of 10 percent per year from the fiscal 2023 level for the foreseeable future. Shareholders feel that the required rate of return is 15 percent.
a. What is a fair market share price for DRMC at the BEGINNING of the fiscal year 2024?
b. What is a fair market share price for DRMC at the BEGINNING of the fiscal year 2018?
c. What is a fair market share price for DRMC at the BEGINNING of the fiscal year 2012?
d. Suppose an investor bought a share of DRMC at the fair market price at the BEGINNING
of the fiscal year 2012 and sold it at the fair market price at the BEGINNING of fiscal
year 2013. What is the investor's expected dividend yield, capital gains yield, and total
yield?
e. Suppose an investor bought a share of DRMC at the fair market price at the BEGINNING
of the fiscal year 2024 and sold it at the fair market price at the BEGINNING of fiscal
year 2025. What is the investor's expected dividend yield, capital gains yield, and total
yield?
****** I found "a" and "b" ******
Please help! thanks