1.Fasco Industries just paid a dividend of D0 = $1.45. Analysts expect the compa

Question

1.Fasco Industries just paid a dividend of D0 = $1.45. Analysts expect the company's dividend to grow by 28% this year, by 11% in Year 2, and at a constant rate of 6% in Year 3 and thereafter. The required return on this low-risk stock is 11.00%. What is the best estimate of the stock’s current market value?
Why are cash flows that are connected to common stock difficult to estimate? How does this compare to those related to bonds.

Please show all work used to solve the problem for complete understanding
Thanks :)

Explanation / Answer

foe 11 % current value = x assume .11*x= 1.45 all goes to dividend market value= 13.18$ best estimate stocks have various reasons that they are hard to track.. a lot of factors like companies position, changing interest rate etc, whereas for a bond, constant rate of interest follows throughout.. u get lesser returns in bonds ' PLEASE RATE ASK FOR MORE HELP IF REQUIRED

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