Respuesta :
If the last dividend paid was $10, the next dividend will be $12.
The stock price today will be $76.38.
What will be the next dividend?
Next dividend = last dividend x (1 + growth rate)
10 x 1.20 = $12
What is the stock price today?
The two-step dividend model would be used to determine the price of the stock today.
Here is the complete question:
Tattletale News Corp. has been growing at a rate of 20% per year, and you expect this growth rate in earnings and dividends to continue for another 3 years.
Dividend in year 1 = 10 x 1.2 = 12
Dividend in year 2 = 10 x 1.2² = 14.40
Dividend in year 3 = 10 x 1.2³ = 17.28
Dividend in year 3 = (17.28 x 1.03) / (0.23 - 0.03) = 88.99
Present value of the cash flows = $76.38
a.If the last dividend paid was $10, what will the next dividend be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
b.If the discount rate is 21% and the steady growth rate after 3 years is 2%, what should the stock price be today? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
To learn more about the two stage dividend model, please check: https://brainly.com/question/26564273
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