Sleepy Ltd. expects its present $1.25 dividend (just paid) to grow by 20 percent over the next

Question:

Sleepy Ltd. expects its present $1.25 dividend (just paid) to grow by 20 percent over the next three years, after which it will remain the same with no growth, forever. If an investor requires a return of 16 percent for investing in Sleepy, what would be its current price?

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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