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Posted by: Homeworkhelp
Price Quoted by Student: $3
Posted On: 2010-12-15 01:01:33
 
Question

(Dividend discount model) Greta’s Coffee Roaster has experienced recent growth, which is expected to continue at a 5% rate per year forever. Next year, it plans on paying a total cash dividend of $10.25 next year increasing by 5% per year thereafter. Calculate the current market value of a share of Greta’s Coffee Roaster stock - given annual dividend payments - if the required return on Greta’s Coffee Roaster common stock is 11%.


Solutions
SOLUTION   Required rate of return r = (D1/
Price $3
Attachment 1: dividend_discount_model-greta.doc
Solution Posted By: Homeworkhelp    Posted on: 15-12-2010