A young start-up company and therefore is not paying any dividends on the stock over the next 5 years.   At the end of year 5, the company will pay a $3 dividend.  The company will pay a $3.25 per share dividend at the end of year 6 and thereafter it will increase the dividends by 4% per year forever. If the required rate of return on this stock is 11%.

What is the current (today's) share price?  

Answer rating: 100% (QA)

To calculate the current share price we need to determine the present value of the future dividends ... View the full answer