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 this dividend out in equal quarterly installments to its shareholders. a. suppose a company currently pays an annual dividend of $4.00 on its common stock in a single annual installment, and management plans on raising this dividend by 5 percent per year indefinitely. if the required return on this stock is 15 percent, what is the current share price?

The DDM tells us that share price = D*(1+G)/R-G

Dividend = 4.00

G= 0.05

R= 0.15

Price = 4*(1.05)/0.15-0.05

Price= $42

Explanation:

We use the dividend discount method to estimate the current price. We use the growth rate and required return to figure out the current price by using the DDM formula.

$42

Explanation:

. Suppose a company currently pays an annual dividend of $4.00 on its common stock in a single annual installment, and management plans on raising this dividend by 5 percent per year indefinitely. If the required return on this stock is 15 percent, what is the current share price?

a)  dividend growth model, is given as

Price = D1 / (r - g) = D0 x (1 + g) / (r - g)

D0=Dividend, $4

g=percentage increase of the dividend

r=return on stock

= 4 x 1.05 / (15% - 5%)

= $42

Current share price will be  $42

what types of rivers

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.