Question: 2) Jedi Technologies stock is expected to pay the first dividend of $3.00 at the end of three years. Once the firm starts paying dividends,
2) Jedi Technologies stock is expected to pay the first dividend of $3.00 at the end of three years. Once the firm starts paying dividends, analysts expect the dividends to grow at a supernormal rate of 7% for the next two years, and then attain a constant growth of 4.7% forever thereafter. The firm's beta is 1.2, the risk-free rate of return is estimated to be 5.4%, and the market risk premium is 4.5%. a) What is the value of Jedi's stock today? b) In addition to the regular dividend stream, Jedi Tech. has announced that they will distribute a special dividend of $1.35 per share at the end of each of the first four years. What will be the value of the stock today
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
