# (a) Union Pacific currently does not pay a dividend. You expect that the company will begin…

(a) Union Pacific currently does not pay a dividend. You expect that the company will begin paying a dividend of \$2 per share in 6 years, and you expect dividends to grow indefinitely at a 3.5% rate per year thereafter. If the required rate of return is 12 percent, how much is the stock currently worth? [8 Points) (b) Walmart Inc. just paid a dividend of do = \$2.08 per share. The dividends are expected to grow at a rate of 6 percent for the next four years and then level off to a 3 percent growth rate indefinitely. If the required rate of return is 12 percent, what is the value of the stock today? [12 Points]
(a) Union Pacific currently does not pay a dividend. You expect that the company will begin…

(a) Union Pacific currently does not pay a dividend. You expect that the company will begin paying a dividend of \$2 per share in 6 years, and you expect dividends to grow indefinitely at a 3.5% rate per year thereafter. If the required rate of return is 12 percent, how much is the stock currently worth? [8 Points) (b) Walmart Inc. just paid a dividend of do = \$2.08 per share. The dividends are expected to grow at a rate of 6 percent for the next four years and then level off to a 3 percent growth rate indefinitely. If the required rate of return is 12 percent, what is the value of the stock today? [12 Points]