Projects to pay a dividend of $.75 next year and then have it grow at 12% for the following 3 years before growing at 8% indefinitely thereafter. The equity has a required return of 10% in the market. The price of the stock should be _

Price of stock = 41.67

Explanation:

The dividend valuation model states the price of a stock is the present value of the expected future dividends discounted at the required rate of return.

Year                                                         Present Value

1      0.75 × 1.1^(-1)   =                              0.6818

2     0.75 × 1.12  × 1.1^(-2)   =                  0.6942

3     0.75 × 1.12^2 × 1.1^(-3)   =              0.7068

4       0.75  × 1.12^3 × 1.1^(-4)  =             0.71968

5 to infin.  (See workings below)          38.8631

Price of the stock                                   41.6657

Price of stock = 41.67

Workings:

Present value of year 5 to infinity

Year 5 will be don in two steps

PV (in year 4) =  (0.75  × 1.12^3 ×1.08 )/(0.1-0.08)

PV (in year 4)    =56.899584

PV in year 0

(56.899584 × 1.1^(-4) =38.86318148

the most important factor in the

work process or industry is to retain the interest of the employee. and to

retain them, their salary or profit must be adjusted to the best value. unless

the employee does not do his job properly, employees must receive bonuses or

benefits to ensure them to stay in the company. it will actually make them stay

longer, make them feel important and reduce costs for hiring new employees.

explanation:

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