Over the past 10 years, the dividends of Party Time Inc. have grown at an annual rate
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Question:
Over the past 10 years, the dividends of Party Time Inc. have grown at an annual rate of 16 percent. The current (D0) dividend is $2.3 per share. This dividend is expected to grow to $2.9 next year, then grow at an annual rate of 12 percent for the following 2 years and 5 percent per year thereafter. You require a 16 percent rate of return on this stock. Use Table II to answer the questions. Do not round intermediate calculations. Round your answers to the nearest cent.
- What would you be willing to pay for a share of Party Time stock today? $
- What price would you anticipate the stock selling for at the beginning of year 3? $
- If you anticipated selling the stock at the end of 2 years, how much would you pay for it today? $
Related Book For
Contemporary Financial Management
ISBN: 9780324289114
10th Edition
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
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