Blue Company just paid a dividend of $1 this year. The growth rate in dividends for...

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Blue Company just paid a dividend of $1 this year. The growth rate in dividends for the next three years is expected to be 3%, and continue growing at 2% in years 4 and 5. Afterwards, it will fall off to a constant 1% perpetually. If the required return is 10%, what is the current share price? Blue Company just paid a dividend of $1 this year. The growth rate in dividends for the next three years is expected to be 3%, and continue growing at 2% in years 4 and 5. Afterwards, it will fall off to a constant 1% perpetually. If the required return is 10%, what is the current share price?

Answer rating: 100% (QA)

To calculate the current share price we need to determine the present value of all future dividends ... View the full answer