Francis Inc.'s stock has a required rate of return of 10.25%, and it sells for $87.50 per share. The dividend is expected to grow at a constant rate of 6.00% per year. What is the expected year-end dividend, D1

D1 is $3.72

Explanation:

The constant growth model of Dividend discount model approach (DDM) is used to calculate the fair price per share of a stock today when the dividends of a stock are growing at a constant rate forever. It values the stock based on the present value of the expected future dividends. The formula for price per share today is,

P0 = D1 / r - g

WHERE,

Plugging the values of the available variables, we calculate the value of D1 to be,

87.5 = D1 / (0.1025 - 0.06)

87.5 * 0.0425 = D1

D1 = $3.71875 rounded off to $3.72

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.