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required: a. computer stocks currently provide an expected rate of return of 16%. mbi, a large computer company, will pay a year-end dividend of $3 per share. if the stock is selling at $60 per share, what must be the market's expectation of the growth rate of mbi dividends? (do not round intermediate calculations. round your answer to 2 decimal places.) b. if dividend growth forecasts for mbi are revised downward to 6% per year, what will be the price of the mbi stock? (round your answer to 2 decimal places.)

Respuesta :

KunalYadav273

As stated in the preceding statement (a). The market anticipates a growth rate of 11.00% for MBI dividends, and (b). The price of such MBI shares is $30 if the growth rate is lowered downward.

What is a company's straightforward definition?

A company is an organizational body created by a group of people to conduct and manage a business venture, whether it be commercial or industrial. Dependent on the corporate legislation of its country, a corporation may be set up in a variety of fashions for taxes and financial responsibility reasons.

Briefing:

Cost of equity = 16%

Price = D1 (ke-g) = 60

g = 11.00%

  = 16.00% - (3/60)

If growth rate revised downward:

Price = $30.00

        = (3/0.16 - 0.06)

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