Sparkle Jewelers expects to pay dividends (per share) of $0.60, $0.90, $2.40, and $3.50 during the next

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Sparkle Jewelers expects to pay dividends (per share) of $0.60, $0.90, $2.40, and $3.50 during the next four years. Beginning in the fifth year, the dividend is expected to grow at a rate of 4 percent indefinitely. If investors require a 20 percent return to purchase Sparkle’s stock, what is the current value of the company’s stock?

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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CFIN

ISBN: 978-1305666870

5th edition

Authors: Scott Besley, Eugene Brigham

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