Excel Corporation has recently witnessed a period of depressed earnings performance. As a result, cash dividend payments

Question:

Excel has recently witnessed a period of depressed earnings performance. As a result, cash payments have been suspended. Investors do not anticipate a resumption of dividends until two years from today, when a yearly of $0.25 will be paid. That yearly is expected to be increased to $0.75 in the following year and $1.50 in the year after that. Beyond the time when the $1.50 is paid, investors expect Excel’s dividends to grow at an annual rate of 5 percent into perpetuity. All dividends are assumed to be paid at the end of each year. If you require an 18 percent rate of return on Excel’s stock, what is the value of one share of this stock to you today?

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... 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...