Kacy's, Inc. paid a dividend of $2 per share last year reflecting a supernormal growth rate...

 

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Kacy's, Inc. paid a dividend of $2 per share last year reflecting a supernormal growth rate of 20%. Dividends will grow at 10% for the next 3 years before settling down to a constant growth of 5%. The required rate of return is 7%. What is the fair market value/price (Po) of their common stock? (5) Kacy's, Inc. paid a dividend of $2 per share last year reflecting a supernormal growth rate of 20%. Dividends will grow at 10% for the next 3 years before settling down to a constant growth of 5%. The required rate of return is 7%. What is the fair market value/price (Po) of their common stock? (5)

Answer rating: 100% (QA)

To calculate the fair market value or price P0 of Kacys Inc common stock we can use the twostage div... View the full answer