ODB Bank, a bank that just started its operation and is planning to declare the following dividends for the following years Year 1 - P2.00 per share ; Year 2 P2.50 per share ; Year 3 - P3.50 per share After year 3 the company is expecting that dividends will start to increase at a constant rate of 5% per year. 1. What will be the value of the company's stock if the required return is 12%?(Round off answer to two decimal places and include comma) 2. Would you recommend a buy position on ODB bank if the current stock price of the company is 38.50? (answer yes or no)
ODB Bank, a bank that just started its operation and is planning to declare the following dividends for the following years Year 1 - P2.00 per share ; Year 2 P2.50 per share ; Year 3 - P3.50 per share After year 3 the company is expecting that dividends will start to increase at a constant rate of 5% per year. 1. What will be the value of the company's stock if the required return is 12%?(Round off answer to two decimal places and include comma) 2. Would you recommend a buy position on ODB bank if the current stock price of the company is 38.50? (answer yes or no)
Chapter7: Stocks (equity) - Characterstics And Valuation
Section: Chapter Questions
Problem 10PROB
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