Thread: [HELP!] Finding stock price per share (Po)?

1. [HELP!] Finding stock price per share (Po)?

Hi guys i'm new here.
I need help from the experts here to solve this problem:

A Stock has paid dividend for $6/share and expecting to grow 15% per year for the next 20 years, and then it will be constant forever. Using rate of return 11% please calculate: a) Stock price per share today (Po) b) if the stock price were$90/share, how much dividend per share would be offered to the investors today?
this is one of the numbers from my last exam. apparently my lecturer hadn't thought us well about this!

2. Originally Posted by Stratos
A Stock has paid dividend for $6/share and expecting to grow 15% per year for the next 20 years Can you calculate what$6 at 15% annually will
accumulate to over 15 years?

3. Originally Posted by Denis
Can you calculate what $6 at 15% annually will accumulate to over 15 years? using constant growth? Dt = D0 x (1+g)t =$6 x (1+0.15)15 = $7.50 4. Originally Posted by Denis Can you calculate what$6 at 15% annually will
accumulate to over 15 years?
constant growth?

$6 x (1.15)15$48.82

5. Correct! So you understand these.

do your calculation again, using n=20:
that'll give ~98.20
then "present value" above using 11%.

seems like you would assume 90
was result (instead of 98.20) and
do calculations over again...

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