Reference no: EM131483165

Would you be able to help me with the following questions? (also attaching the questions as a Word document)

Online Research Assignment

Look for a company that has paid dividends for at least ten years. Use the constant growth model to estimate the company's expected rate of return. Hint: you will need its current stock price.

Written Assignment

1. Juno Mining Company current dividend (at time 0) is $0.50 a share. Its dividend growth rate is expected to be 8% a year forever. How much would you pay for a share if your required rate of return is 15%?

2. How much would you be willing to pay for one share of Juno if, all else equal, its dividend grows at 8% a year for the next 3 years, and then at a constant 6% forever?

3. Cedar Company expects a constant dividend growth rate of 6%. Its dividend next year is $1.20 per share, and its current stock price is $30. What is its stock price at the end of 3 years?

Discussion

Based on your Online Research Assignment, answer the following questions: What is the difference between expected and actual returns? How confident are you that the company's expected rate of return will be a good proxy for its actual rate of return?