What is the firm’s expected stock price in five years using the dividend growth model?
Standard Deviation and Median interpretation based on Sales
July 9, 2019computation of basic statistics
July 9, 2019Medical Corporation of America (MCA) has a current stock price of $36, and its last dividend (D0) was $2.40. In view of MCA’s strong financial position, its required rate of return is 12 percent. If MCA’s dividends are expected to grow at a constant rate in the future, what is the firm’s expected stock price in five years?
Please refer attached file for better clarity of formulas.
Solution:
Current price=Po=$36
Required rate of return=12%
Let …
This solution describes the steps to calculate expected stock’s price in five years in plain text and in the attached Excel file.
