Lets look at a company that is currently not paying dividends. You predict that in five years
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Question:
Let’s look at a company that is currently not paying dividends. You predict that in five years the company will pay a dividend for the first time. The dividend will be $0.50 per share. You expect the dividend to grow at an 8% rate per year indefinitely at that time. The required return on companies like this one is 15%. What is the price of the stock today?
$5.39
$7.14
$4.08
$3.45
$1.75
Related Book For
The Legal Environment of Business
ISBN: 978-0538473996
11th Edition
Authors: Roger E Meiners, Al H. Ringleb, Frances L. Edwards
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