What would be the price of u-u

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Question - Up and Up Inc. (U&U) just paid a $1.40 per share annual dividend. The company is planning on paying the dividends of $1.50, $1.75, $2.00 a share over the next 3 years, respectively. After year 3, the dividend will be a constant $2.25 per share per year.

-What is the price of U&U stock today if the required return on similar stock with the same level of risk is 8%?

-What would be the price of U&U with the same required return as in 1, if the dividend increases with 2% constant annual growth from year 4 onwards?

-How can we find out the required return of the U&U stock?

Reference no: EM133021575

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