Since it has been in business, FoolsGold Jewelry has never paid a dividend. The company will not
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Since it has been in business, FoolsGold Jewelry has never paid a dividend. The company will not pay a dividend at the end of this year. However, two years from today—at the end of Year 2—FoolsGold expects to pay a dividend equal to $0.50 per share, which it plans to increase by 6 percent each year thereafter for the remainder of the company’s life. If investors require a 14 percent rate of return to purchase its common stock, what should be the market value of FoolsGold’s stock today?
DividendA 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...
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