A firm expects to pay dividends at the end of each of the next four years of $2.00, $1.50, $2.50, and $3.50. You require a 14% rate of return during these four years. If growth is then expected to level off at 8 percent, expected rate of return drops to 10%.

How much should you be willing to pay for this stock? 

Answer rating: 100% (QA)

Present Value of Dividends 200 1 014 150 1 0142 250 1 0143 350 1 ... View the full answer