Burp Cola Company just finished making an annual dividend payment of $2 per share on its common stock Its common stock dividend has been growing at an annual rate of 10 percent Kelly Scott requires a 16 percent annual return on this stock What intrinsic value should Kelly place on one share of Burp...

Burp-Cola Company just finished making an annual dividend payment of $2 per share on its common stock.

Question:

Burp-Cola Company just finished making an annual payment of $2 per share on its common stock. Its has been growing at an annual rate of 10 percent. Kelly Scott requires a 16 percent annual return on this stock. What intrinsic value should Kelly place on one share of Burp-Cola under the following three situations?
a. Dividends are expected to continue growing at a constant 10 percent annual rate.
b. The annual growth rate is expected to decrease to 9 percent and to remain constant at that level.
c. The annual growth rate is expected to increase to 11 percent and to remain constant at the level.
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...