Solved: What do you expect the dividend to equal in three years, Accounting Basics

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What do you expect the dividend to equal in three years

Problem:

You are evaluating the price of a firm's stock. Yesterday, the firm paid $1 a share dividend. You expect the firms earnings and its dividend to grow 5% annual rate. The risk free rate of interest is 2%. The required rate of return for this firm's stock is 9%.

What do you expect the dividend to equal in three years?

What would be the most you would pay for this stock if you planned to hold it for 3 years? What about holding it for ten years?

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Accounting Basics: What do you expect the dividend to equal in three years

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