Neat Nut Inc. does not expect to initiate dividends over the next four years. The company will
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Question:
Neat Nut Inc. does not expect to initiate dividends over the next four years. The company will then pay a dividend of $1.5 per share five years from today and will increase the dividends by 3.5% per year thereafter. The company has an 11% required rate of return.
A. What is the company's stock price in today's dollars if the desired rate of return is 11%? [Clearly show all formula(s), steps, relevant figures and final answer.
Round only the final answer to two decimal places, where applicable.
B. Identify two or more possible reasons that the company does not plan to initiate dividend in the beginning years. Briefly explain.
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9780135811603
5th Edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford
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