FIN302: Chp 9 NOTES ON HW
FIN302: Chp 9 NOTES ON HW FIN302
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This 1 page Study Guide was uploaded by Giulia Dias Roncoletta on Tuesday November 3, 2015. The Study Guide belongs to FIN302 at University of Miami taught by Frank Peterson in Summer 2015. Since its upload, it has received 68 views. For similar materials see FIN 302 - Fundamentals of Finance in Finance at University of Miami.
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Date Created: 11/03/15
Giulia Dias Roncoletta FN302 November 3 2015 Chapter 9 NOTES ON HOMEWORK 0 The price of stock today is equal to the present value of all the future dividends 0 Companies without dividends are still invested on in hope that they ll pay dividends eventually 0 Dividend growth rate and discount rate are directly related 0 For dividend growth questions asking for price of stock use the formula o Pt Dt gtlt1gR g 0 After finding the present value today to find for different years use formula 0 Pt Po1gquott 0 The share price of a preferred stock is calculated by the dividend divided by the required return R DPo 0 The dividend growth formula always gives you the PV one period before the first payment 0 D1 Do1g 0 If a company has a dividend growth rate for a specified period of time then thereafter a different growth rate you calculate the dividend at the first rate for the specified period of time then multiply 1newrate to account for the remainder growth Make sure to divide by the different new rate 0 For a negative dividend growth use the same formula but make sure to include the negative signs for negative rates 0 Preferred stock shareholder with prioritized fixed dividend and the share price is calculated by dividing the dividend payment by the required return 0 Perpetuity forever
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