5. Weston Corporation just paid a dividend of $1.00 a share (i.e., D0=$1.00). The dividend is expected to grow 12% a year for the next 3 years and the at 5% a year thereafter. What is the expected dividend per share for each of the next 5 years? 6. Tresnan Brothers is expected to pay a $1,800 per share dividend at the end of the year (i.e., D1=$1.80). The dividend is expected to grow at a constant rate of 4% a year. The required rate of return, rs, on the stock is 10%. What is the stock's current value per share? 7. Scampini Technologies is expected to generate $25 million in free cash flow next year, and FCF is expected to grow at a constant rate of 4% per year indefinitely. Scampini has no debt or preferred stock, and its cost of capital is 10%. If Scampini has 40 million shares of stock outstanding, what is the stock's value per share?
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D1 = D0 * (1 + g) D2 = D1 * (1 + g) D3 = D2 * (1 + g) D4 = D3 * (1 + g) D5 = D4 * (1 + g) Given that D0 = $1.00, g = 12% for the first 3 years, and 5% thereafter, we can calculate the expected dividends as follows: D1 = $1.00 * (1 + 0.12) = $1.12 D2 = $1.12 * Show more…
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