Finance

Fletcher Company's current stock price is $36.000, its last dividend was $2.40, and its required rate of return is 12%. If divends are expected to grow at a constant rate, g, in the future and if Rs is expected to remain at 12%, what is Fletcher's expected stock price 5 years from now?

  1. 👍 0
  2. 👎 0
  3. 👁 736
asked by Jessy
  1. First find g,
    g= rs-(D1/P) = 5.33%
    After 5 years
    P = (D1(1+g)^5)/(rs-g) = $ 46.37

    1. 👍 0
    2. 👎 0
    posted by Waqas

Respond to this Question

First Name

Your Response

Similar Questions

  1. Finance

    The Isberg Company just paid a dividend of $0.75 per share, and that dividend is expected to grow at a constant rate of 5.50% per year in the future. The company's beta is 1.25, the market risk premium is 5.00%, and the risk-free

    asked by Caitlin on April 2, 2012
  2. FInance

    Most corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays

    asked by Paul on March 10, 2014
  3. finance

    AAA has only stock and bonds in its capital structure. Balance sheet information: Long term debt (par value--NOT number of bonds) = $20,000,000, Common equity and retained earings = $17,000,000, and Shares of stock outstanding =

    asked by tina on June 1, 2012
  4. Finance. PLEASE HELP ME

    1) growth rates The stock price of the company is $76 investors require a 14% rate of return on similar stocks If the company plans to pay a dividend of $5.00 next year the expected growth rate of the company's stock price is

    asked by Heidi on June 22, 2009
  5. Finance questions

    1) growth rates The stock price of the company is $76 investors require a 14% rate of return on similar stocks If the company plans to pay a dividend of $5.00 next year the expected growth rate of the company's stock price is

    asked by Heidi on June 21, 2009
  6. Finance

    The stock price of Webber Co. is $68. Investors require an 11 percent rate of return on similar stocks. Required: If the company plans to pay a dividend of $3.85 next year, what growth rate is expected for the company’s stock

    asked by Paul on March 10, 2014
  7. finance

    If our company's bank loan has a 12 interest rate, what is our effective, after-tax interest cost? Assume the tax rate = 38% If our preferred stock is paying a contractual $1.85 annual dividend and has current market price of

    asked by Cyn on July 17, 2007
  8. Finance

    If our company's bank loan has a 12 interest rate, what is our effective, after-tax interest cost? Assume the tax rate = 38% If our preferred stock is paying a contractual $1.85 annual dividend and has current market price of

    asked by Cyn on July 17, 2007
  9. fin 3030

    2. A new common stock issue paid a $1.50 dividend last year. The par value of the stock is $25, and earnings per share have grown at a rate of 3% per year. This growth rate is expected to continue into the foreseeable future. The

    asked by Anonymous on October 12, 2012
  10. Math

    If one knows a stock price, the current dividend paid on ?stock owned and the current dividend yield, can the total number of stock in that company be figured out

    asked by Carol on April 2, 2019

More Similar Questions