Schnussenberg Corporation just paid a dividend of $0.98 (D0 = $0.98) per share and has a required rate of return of 9.4%, and its dividends is expected to grow at 8.17% per year.
1.What is the company’s current stock price, P0?
2. What is the company’s expected stock price in 6 years (what is P6)?
Current dividend paid=$0.98
required rate of return=9.4%
Dividend Growth rate=8.17%
As we know the formula for find out stock price
Here Kce=required rate of retuen ((hurdle rate in this case)
D1=nex year's dividend
g= dividend growth
puttin the values in the formula and solving:
b) Price of stock after 6 years
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