Question

ABC private limited as given the dividend of $5 last year and has promised to increase the dividend by 8% each year for the next four years. (a) Find out the dividend of each of the next four years. (b)If the stocks are selling at $120 at the end of fourth year, find out the price of stock today, assuming expected return as 12%. (c) Write a detailed comment on what will happen to the today’s selling price of the stock if the expected return is increased from 12% to 16% (d) If the stocks are selling at $90 today, find out the price of stock at the end of fourth year, assuming expected return as 12% (e)Write a detailed comment on what will happen to the selling price of the stock at the end of fourth year if the expected return is decreased from 12% to 8%.

Answer 1

Answer:

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Explanation:

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