Compute the anticipated value of the dividends

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Question - Hunter Petroleum Corporation paid a $5 dividend last year. The dividend is expected to grow at a constant rate of 9 percent forever. The required rate of return is 12 percent (this will also serve as the discount rate in this problem). (Use a Financial calculator to arrive at the answers.)

a. Compute the anticipated value of the dividends for the next three years.

b. Calculate the present value of each of the anticipated dividends at a discount rate of 12 percent.

c. Compute the price of the stock at the end of the third year (P3).

e. Compute the current value of the stock.

f. Use formula given below to show that it will provide approximately the same answer as part e.

Reference no: EM133069849

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