On a common stock, you expect the following dividend payments for the next three years: $1.40, $1.75,
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On a common stock, you expect the following dividend payments for the next three years: $1.40, $1.75, and $2.00. After the third year, the dividends are expected to stay constant at $2 (i.e., the growth rate of dividends is 0%). The required rate of return on the stock is 14%. What is the estimated intrinsic value per share? (Hint: Solve this problem like a regular multi-stage DDM problem. In the terminal value formula, simply use 0% for the dividend growth rate).
Related Book For
Fundamentals of Financial Management
ISBN: 978-1337395250
15th edition
Authors: Eugene F. Brigham, Joel F. Houston
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