A company recently paid a $3.50 dividend. It plans to increase this dividend by 15% next year.
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Question:
A company recently paid a $3.50 dividend. It plans to increase this dividend by 15% next year. The year after, it will begin reducing its dividend by 3% per year until it arrives at the sector average of 5%. The company's stock currently sells for $75.
What is the market signaling is the company's appropriate discount rate?
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