A firm has just paid its annual dividend. It expects to pay an annual dividend of $4.00
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A firm has just paid its annual dividend. It expects to pay an annual dividend of $4.00 per share one year from today. Given the firm’s economic prospects, the annual dividend is expected to grow 10% per year forever (i.e., $4.00 at date 1, $4.40 at date 2, etc.). Investors discount these dividends at a 15% discount rate. What is the present value of the stream of future dividends?
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