A share of Tri-3 Triple Tire Company currently sells for $33.00 per share. You estimate that...
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A share of Tri-3 Triple Tire Company currently sells for $33.00 per share. You estimate that Tri-3 shares will pay a $33 dividend in 33 years. Prior to this, the company will pay no dividends. After the first dividend in year 33, the market consensus is that dividend will grow by a constant rate per year. If the appropriate interest rate for Tri-3 shares is .09 percent, what is the market consensus growth rate? Hint: Find the growth rate that will set the market price of a share equal to the intrinsic value of a share. A share of Tri-3 Triple Tire Company currently sells for $33.00 per share. You estimate that Tri-3 shares will pay a $33 dividend in 33 years. Prior to this, the company will pay no dividends. After the first dividend in year 33, the market consensus is that dividend will grow by a constant rate per year. If the appropriate interest rate for Tri-3 shares is .09 percent, what is the market consensus growth rate? Hint: Find the growth rate that will set the market price of a share equal to the intrinsic value of a share.
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Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
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