A company's stock is expected to have a super-normal growth rate of 30% over the next three
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Question:
A company's stock is expected to have a super-normal growth rate of 30% over the next three years, before settling down to a stable growth rate of 6% forever. The company has just paid a dividend of $2 per share and the required return on this company's shares is 10%.
(a) What are the expected dividends per share for the next four years?
(b) What is the expected share price in three years' time?
(c) What is this company's share price today?
Related Book For
Essentials of Managerial Finance
ISBN: 978-0324422702
14th edition
Authors: Scott Besley, Eugene F. Brigham
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