Current Quarterly Dividends 2021:
Projected Dividend Growth Rate 2022: 1.734215836
Current Price of Stock: 58.33
- Average Cost Of Equity 0 07100122208 Current Quarterly Dividends 2021 Projected Dividend Growth Rate 2022 1 734215836 1 (63.06 KiB) Viewed 25 times
Use the averaged cost of equity from Part III (viii) as the company's cost of equity for the following: Please come up with the valuation of the stock in each of the following three scenarios: 1. Zero-growth dividends: Assume that annual dividends in the future will stay the same and not grow larger than the sum of all quarterly dividends in 2021. 2. Constant-growth dividends: please estimate the price of the stock for each of the following possible growth rates of the dividends: 1%, 2%, 3%, 4%, and 5%. Which constant growth rate yields the valuation that is closest to the market price? 3. Non-constant growth dividends: Assume that dividends will grow at the rate calculated in Part III (iii) for the next two years and then come down to a lower growth rate, thereafter. Estimate the price using the following second-stage growth rate: 2%. In which scenario is the price you calculated closest to the market price? Which scenario do you think is most applicable for the company?