Question: Dillon Mechanical Inc s first dividend of 2 per share is
Dillon Mechanical Inc.’s first dividend of $2 per share is expected to be paid six years from today. From then on, dividends will grow by 10 percent per year for five years. After five years, the growth rate will then slow to 5 percent per year in perpetuity. Assume that Dillon's required rate of return is 15 percent. What is the price of a share of Dillon Mechanical today?
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