Asked by Ella
This year Shoreline Light and Gas(SL&G) paid its stockholders an annual dividend of $3 a share. A major brokerage firm recently put out a report on SL&G stating that,in its opinion, the company's annual dividends should grow at the rate of 10% per year for each of the next five years and then level off and grow at the rate of 6% a year therafter.
a. use the variable growth DVM and a required rate of return of 12%,to find the minimum price you shhould be willing to pay for this stock.
b. Redo the SL&G problem in part a, this time assuming that after year 5, dividends stop growing altogether (for year 6 and beyond g=0) . Use all other information given to find stocks intrinsic value.
c. contrast your two answers and comment on your findings.How important is growth to this valuation?
a. use the variable growth DVM and a required rate of return of 12%,to find the minimum price you shhould be willing to pay for this stock.
b. Redo the SL&G problem in part a, this time assuming that after year 5, dividends stop growing altogether (for year 6 and beyond g=0) . Use all other information given to find stocks intrinsic value.
c. contrast your two answers and comment on your findings.How important is growth to this valuation?
Answers
Answered by
Adawiyah
How to do it
There are no AI answers yet. The ability to request AI answers is coming soon!