Question 1 The company A’s stock has paid dividends of $1.75 over the past 12 months. Its historical growth rate of divi

[answerhappygod]

Question 1
The company A’s stock has paid dividends of $1.75 over the past
12 months. Its historical growth rate of dividends has been 5% but
analysts expect the growth rate to be 6% annually for the
foreseeable future.
solves
i) Determine the value of the stock if the required rate of
return on stocks of similar risk is 11%. Please show each step of
your calculation.
ii) If analysts believe the risk premium on the stock should be
decreased by 0.5%, what is the new required rate of return on
company A’s stock? What is the percentage change in price compared
with part i)? Please show each step of your calculation.