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Compute the price of the stock

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Assume the required rate of return goes up to 13%, what will be the new price of the stock? Jessy Smith will pay a dividend of $2.00 per share at the end of the year. The required rate of return is 10% and the constant growth rate is 5%.

a. Compute the price of the stock?

c. Assume the growth rate is 6%, what will be the new price of the stock?

d. Assume the dividend payout is $3.00, what will be the new price of the stock?

e. Assume the firm will pay a $4.00 dividend at the end of the year. If the current share price is $40 and the constant growth rate is 5%, what is the required rate of return?

Reference no: EM132818320

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