1.Consider a high tech firm that pays no dividends today.Analysts' reports suggest that the firm will grow...
Fantastic news! We've Found the answer you've been seeking!
Question:
1.Consider a high tech firm that pays no dividends today.Analysts' reports suggest that the firm will grow but needs to reinvest everything for the next 4 years so it will pay no dividends.Five years from now it is expected that the firm will start paying a dividend of $1 per share.The dividend per share is then expected increase at a rate of 25% a year for the next 14 years, (years 6 - 19), after which point growth is expected to slow and the dividend growth is expected to decline to a rate of only 4% per year thereafter into forever.If the opportunity cost of capital for the firm is 10%, determine a price for a share of this firm today in a normal market.
Related Book For
Posted Date: