Assume that Bon Temps is a constant growth company whose last dividend (D 0 , which was paid yesterday) was $2.00 and whose dividend is expected to grow indefinitely at a 4% rate.
1. What is the firm’s expected dividend stream over the next 3 years?
2. What is its current stock price?
3. What is the stock’s expected value 1 year from now?
4. What are the expected dividend yield, capital gains yield, and total return during the first year?