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Business, 16.04.2020 00:23 lychee1406

A. Computer stocks currently provide an expected rate of return of 14%. MBI, a large computer company, will pay a year-end dividend of $4 per share. If the stock is selling at $80 per share, what must be the market's expectation of the growth rate of MBI dividends? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Growth rate %
b-1. If dividend growth forecasts for MBI are revised downward to 4% per year, what will be the price of the MBI stock? (Round your answer to 2 decimal places.)

Price $
b-2. What (qualitatively) will happen to the company's price–earnings ratio?

a. Increases
b. Decreases

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Answers: 3

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