Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Orwell Building Supplies just paid a dividend of $1

Orwell Building Supplies just paid a dividend of $1

Finance

Orwell Building Supplies just paid a dividend of $1.75. Its dividend growth rate is expected to be -1% for two years, 0% for two years, and then at a constant rate of 5% forever. The expected dividends for each of the next five years are: D. - $1.73;D- $1.71: D3 - $1.71: D4 - $1.71: Ds - $1.80 If Orwells required return is 12%, what is the expected price of the stock at the end of the fourth year (P.)? $27.00 $15.00 $25.71 $15.75

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Using Constant growth model,

Stock Price at the end of year 4 = 1.80/(0.12 - 0.05)

Stock Price = $25.71