Question

Hunda Corporation’s expected year end dividend amounting to RM1.60, and its required return is 11 percent. The dividend yield is 6 percent and its growth rate is expected to be constant in the future. What is Hunda Corporation’s expected stock price in 7 years?

Answer 1

Answer:

Hunda expected stock price in 7 years = RM48.12

Step-by-step explanation:

expected year end dividend = RM1.60

required return = 11%

dividend yield = 6%

growth rate = constant

Determine Hunda corporation's expected stock price in 7 years

stock price in 7 years

= expected year end dividend / (required return rate - dividend yield rate )

= 1.6 * (1.06)^7  / ( 0.11 - 0.06 )

= 2.4058 / 0.05 =  48.12%