Question: A firm projects that dividends will grow at a rate of 6% per year for four years and then will grow at a rate of

A firm projects that dividends will grow at a rate of 6% per year for four years and then will grow at a rate of 4% per year forever. The stock's required return is 8% and the last annual dividend paid was $1.40. The most an investor should be willing to pay for this stock today is ______. (Watch your rounding, carry out dividends to four or more decimal places.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!