Serious Spokes Custom Hot Rods is expected to pay a dividend in year 1 of $1.88, a dividend in year 2 of $2.84, and a dividend in year 3 of $3.85. After year 3, dividends are expected to grow at the rate of 5.08% per year. An appropriate required return for the stock is 8.3%. Using the multistage DDM, the stock should be worth __________ today. State your answer as a dollar amount with two decimal places.
A bond with a duration of 7.9 has a current price of $1141.03, and its yield to maturity is 7.66%. If the yield to maturity changes to 7.3%, you would predict that the new value of the bond will be _________. State your answer as a dollar amount with two decimal places.
QUESTION 1: Stock should be worth... View the full answer