Question

MMK Cos. normally pays an annual dividend. The last such dividend paid was $1.7, all future dividends are expect to grow at a rate of 8 percent per year, and the firm faces a required rate of return on equity of 21 percent. If the firm just announced that the next dividend will be an extraordinary dividend of $26.5 per share that is not expected to affect any other future dividends.

Required:
What should the stock price be? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Stock price $
Last dividend.... $1.70
Growth rate..... 8%
Required rate of return. 21%
Dividend next year... $26.50



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  • CreatedSeptember 19, 2013
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