4.) Suppose you believe that Entergy Corp.’s 6.0 percent dividend growth rate will only hold
5 years. After that, the dividend growth rate will return to Entergy Corp.’s historical 10-year
average of 7.5 percent. Note that D6 = D5 x 1.075. (Use to answer questions 4-8)
Current stock yearly dividend in 2002 is $1.60
a.) What was the value of Entergy Corp.’s stock on January 1, 2003 (the end of 2002), if the required rate of return is 13.5 percent?
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