Stock price today = $13.807
Explanation:
According to the dividend valuation model , the current price of a stock is the present value of the expected future dividends discounted at the required rate of return
This principle can be applied as follows:
The value of cash flow the stock today is the present value of the future cash flow discounted at the required rate of return
Step 1 : Compute the PV in year 3 of future dividend
PV = D× (1+g)/r-g
D- div in year 3, g- growth rate, r-required rate of return
PV in year 3 = 2× (1.05)/0.15-0.05
= 21
Step 2: PV in year in year 0
PV = PV in year 3 × (1+r)^(-n)
r-rate of return- 15%, n- number of years- 3
= 21 × 1.15^(-3)
=13.80784088
Stock price today = $13.807
Step-by-step explanation:
There are 10 chocolate bars in the box, 6 of them are milk chocolate bars. So the probability of chosing milk chocolate bar is and the probability of chosing not milk chocolate bar is
Chosing 4 chocolate bars, you can choose 0, 1, 2, 3, 4 milk chocolate bars. Find probabilities:
So, a probability distribution table is