Question

Coolibah Holdings is expected to pay dividends of $ 1.00 every six months for the next three years. If the current price of Coolibah stock is $ 21.90​, and​ Coolibah's equity cost of capital is 14​%, what price would you expect​ Coolibah's stock to sell for at the end of three​ years?

Answer 1

Answer: The price that would be expect​ed for Coolibah's stock to sell for at the end of three​ years is $28.87

Explanation: It should be noted that to calculate a price that would be expected in Coolibah's stock to sell for at the end of three​ years can be calculated using financial calculator:

A) Using a financial calculator, PV = -$22.60 , PMT = $1.20, n = 6, I = 18% / 2;

calculate FV = $28.87 .