Solve these financial accounting question Do fast and step by step calculation A stock will not pay dividends until three years from now. Thedividend then will be $2.00 per share, the dividend payoutratio will be 40 percent, and return on equity will be 15percent. If the required rate of return is 12 percent, which ofthe following is closest to the value of the stock?a. $27.b. $33.c. $53.d. $67.

Explanation of Dividend Growth RateThe dividend growth rate represents the expected annual growth…

Answered: A stock will not pay dividends until…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 19P

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A stock is trading at $80 per share. The stock is expected to have a yearend dividend of $4 per share (D1 = $4), and it is expected to grow at some constant rate, g, throughout time. The stock’s required rate of return is 14% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of gL?
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