Orwell building supplies' last dividend was $1.75. its dividend growth rate is expected to be constant at 13.00% for 2 years, after which dividends are expected to grow at a rate of 6% forever. its required return (rs) is 12%. what is the best estimate of the current stock price? select the correct answer. a. $36.36 b. $35.02 c. $37.03 d. $37.70 e. $35.69

b. $35.02

Explanation:

The first dividends will be calculate by multiplying by the grow rate and bring them to present value:

first year:

D0 x (1+g)

1.75 x 1.13 = 1.977500

Then we calcualte the present value:

1.9775/1.12 = 1.7656

second year:

D1 x (1+g)

1.9775 x (1.13) = 1.7656

PV: 1.7814

Finally,, we calcualte the present value of the next dividends using the dividend grow model

We calcualte next year dividneds:

D2 x (1+g) = D3

1.9775 x 1.06 = 2.368650

g = 6%

and return 12%

39.47749167

then, we calcualte the present vale:

PV = 31.4712

Finally, we add all these values

1.7656 + 1.7814 + 31.4712 = 35,0182 = 35.02

This will be the estimate current stock price.

odd consecutive integers are odd integers that follow each other. they have a difference of 2 between every two numbers. if n is an odd integer, then n, n+2, n+4 and n+6 will be odd consecutive integers. the first number in the pattern is always the variable on its own or in this case, "n". examples.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.