Suppose a company has net income of $1000,000 and a plowback ratio of 40%. There are 50,000 shares of stock outstanding. The company plans to increase dividends by 22% each year for the next 2 years and then apply a 2.25% growth rate to dividends each year indefinitely. The required return is 13%
What should the stock price be today?
What is this year's deviend yield? what is this year's capital gains yield?
What will the stock price be in 2 years?
What will dividend yield and capital gains yield be in 2 years?