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Integrated Potato Chips paid a
$2.70 per share dividend yesterday. You expect the dividend to grow
steadily at a rate of 6% per year.
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a.
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What is the expected dividend in
each of the next 3 years? (Do not round
intermediate calculations. Round your answers to 2 decimal places.)
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Expected
Dividend
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Year 1
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$
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Year 2
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Year 3
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b.
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If the discount rate for the stock
is 10%, at what price will the stock sell? (Do not
round intermediate calculations. Round your answer to 2 decimal places.)
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Current price
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$
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c.
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What is the expected stock price 3
years from now? (Do not round intermediate
calculations. Round your answer to 2 decimal places.)
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Future price
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$
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d.
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If you buy the stock and plan to
hold it for 3 years, what payments will you receive? What is the present
value of those payments? (Leave no cells blank -
be certain to enter "0" wherever required. Do not round
intermediate calculations. Round your answers to 2 decimal places.)
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Year
1
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Year
2
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Year
3
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DIV
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$
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$
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$
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Selling price
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Total cash flow
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PV of cash flow
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