Assume that at the end of next year, Company A will pay a dividend of $2.00 per share, an increase from the current dividend of $1.50 per share. After that, the dividend is expected to increase at a constant rate of 5%. If you require a 12% return on the shares, what is the value of the shares?

A stock is not expected to pay dividends for 3 years. So the dividend is expected to be $2 per share, the dividend payout rate is expected to be 40%, and the return on equity is expected to be 15%. If the required rate of return is 12%, calculate the value of the stock today.

Answer rating: 100% (QA)

a To calculate the value of the shares we can use the dividend discount model V D r g Where V the va... View the full answer