Need Correct answers! please Sia Dance Studios has an annual cash dividend polic

Question

Need Correct answers! please

Sia Dance Studios has an annual cash dividend policy that raises the dividend each year by 5%. Last year's dividend, Div0,was company will be in business for 50 years with no liquidating dividend. What is the price of this stock if an investor wants a return of 9%? an investor wants a return of 11%? an investor wants a return of 13%? an investor wants a return of 15%? an investor wants a return of 17%? What is the price of this stock if an investor wants a return of 9%? (Round to the nearest cent.) What is the price of this stock if an investor wants a return of 11 % (Round to the nearest cent.) What is the price of this stock if an investor wants a return of 17%? (Round to the nearest cent.)

Explanation / Answer

price of stock = summation (D*(1+g)^n-1)/((1+k)^n) g= dividend growth rate, k=required rate of return, D= amount of dividend- thid id the exact formula but if n is large such as 50, it can be approx as   

price of stock = (D*(1+g))/(k-g)

a) P = 5*(1+0.05)/(0.09-0.05) = $131.25

b) P = 5*(1+0.05)/(0.11-0.05) = $87.5

c) P = 5*(1+0.05)/(0.13-0.05) = $65.6

d) P = 5*(1+0.05)/(0.15-0.05) = $52.5

e) P = 5*(1+0.05)/(0.17-0.05) = $43.75

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