CDS Inc. is entering the declining state of its life cycle. The current dividend is $5...
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CDS Inc. is entering the declining state of its life cycle. The current dividend is $5 per share. The dividend is not expected to grow (remain constant) in the next ten years, then a negative growth of 3% per year for twenty years and finally a negative growth of 1% forever. If the required return (discount rate) is 6% per year, calculate the current share price. CDS Inc. is entering the declining state of its life cycle. The current dividend is $5 per share. The dividend is not expected to grow (remain constant) in the next ten years, then a negative growth of 3% per year for twenty years and finally a negative growth of 1% forever. If the required return (discount rate) is 6% per year, calculate the current share price.
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Answer rating: 100% (QA)
To calculate the current share price we can use the dividend discount model DDM which takes into acc... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation
ISBN: 978-0324302950
6th edition
Authors: Clyde P. Stickney
Posted Date:
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