What is your estimate of yubaba stock price four years

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Reference no: EM131130880

The Yubaba Company has so far not paid a dividend on its stock. Investors believe that the Company won’t pay a dividend next year, but that it will pay dividends starting two years from now. The dividend then is expected to be $0.20 per share. Three years from now the dividend is expected to be $0.50 per share, and four years from now it’s expected to be $0.75 per share. Thereafter the dividend is expected to grow at a constant rate = 4% per year. Investors require a minimum annual rate of return on Yubaba stock = 13%.

a) What is your estimate of Yubaba’s stock price four years from now?

b) What is your estimate of Yubaba’s stock price today?

Reference no: EM131130880

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