Calculate the price per share

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1. ABC Company has a share price of $25 today. If ABC Company is expected to pay a dividend of $1.00 this year, and its stock price is expected to grow to $28.75 at the end of the year, what is ABC's dividend yield and equity cost of capital?

2. XYZ Company currently pays a dividend of $1.50 per year, and it will continue to pay this dividend forever.

a) Calculate the price per share if its equity cost of capital is 10% per year assuming that dividends are paid at the end of the year.

b) Calculate the price per share if its equity cost of capital is 10% per year assuming that dividends are paid quarterly.

Reference no: EM131500757

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