A stock you are evaluating just paid an annual dividend of $2.10. Dividends havegrown at a constant rate of 1.2 percent over the last 15 years and you expect this tocontinue.a. If the required rate of return on the stock is 12.2 percent, what is its fair presentvalue?b. If the required rate of return on the stock is 15.2 percent, what should the fair valuebe four years from today?Note: For all requirements, do not round intermediate calculations. Round youranswers to 2 decimal places. (e.g., 32.16)a. Fair present valueb. Expected fair valueAmount

Given:Last dividend paid (D0D_0D0) = $2.10Growth rate (g) = 1.2% or 0.012Required rate of return…

Answered: A stock you are evaluating just paid an…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 3P

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