This preview shows page 1. Sign up to view the full content.
Unformatted text preview: annual rate of interest is i = 10%. 200 · 1± 1+ r 1+ i ² 10 ir = 200 · 1( 1 . 03 1 . 10 ) 10 . 10. 03 = 1376 . 75 2. A stock is selling for $21 per share. The stock pays a dividend at the end of each year, and the ﬁrst dividend, x , will be paid one year from now. Each year, the dividend is expected to grow at a rate of r = 5% per year. If The yield rate on the stock is i = 15%. Evaluate x using the dividend discount model. Price = D 1 ir 21 = x . 15. 05 x = 2 . 1 1...
View
Full
Document
This note was uploaded on 04/08/2008 for the course MATH 210 taught by Professor Hubscher during the Spring '08 term at University of Illinois at Urbana–Champaign.
 Spring '08
 Hubscher
 Math

Click to edit the document details