Storico Co. just paid a dividend of $3.35 per share. The company will increase its dividend by

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Storico Co. just paid a dividend of $3.35 per share. The company will increase its dividend by 16 percent next year and will then reduce its dividend growth rate by 4 percentage points per year until it reaches the industry average of 4 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on the company’s stock is 10.5 percent, what will a share of stock sell for today?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Corporate Finance Core Principles and Applications

ISBN: 978-1259289903

5th edition

Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan

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