Question

ABC private limited as given the dividend of $5 last year and has promised to increase...

ABC private limited as given the dividend of $5 last year and has promised to increase the dividend by 8% each year for the next four years.
a. Find out the dividend of each of the next four years. [2 marks]
b. If the stocks are selling at $120 at the end of fourth year, find out the price of stock today, assuming expected return as 12%. [2 marks]
c. Write a detailed comment on what will happen to the today’s selling price of the stock if the expected return is increased from 12% to 16%. [3 marks]
d. If the stocks are selling at $90 today, find out the price of stock at the end of fourth year, assuming expected return as 12%. [2 marks]​
e. Write a detailed comment on what will happen to the selling price of the stock at the end of fourth year if the expected return is decreased from 12% to 8%

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