Question

Peak's Organic Foods' current dividend is $5.00. You expect the growth rate to be 8 percent for years 1 to 5, and 2 percent from years 6 to infinity. The required rate of return on this firm’s equity is 10 percent. Determine the following:
a. The expected dividend at the end of year 5
b. The expected dividend at the end of year 6
c. The expected price of the stock at the end of year 5 (immediately after the year 5 dividend)
d. The price of the stock today



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  • CreatedFebruary 25, 2015
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