Pixie Apparel, Inc. is experiencing phenomenal growth due to a viral video showing Kim Karddashian using...

 

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Pixie Apparel, Inc. is experiencing phenomenal growth due to a viral video showing Kim Karddashian using wearing one of the company's blouses. As a result, the company expects the dividends to grow at a rate of 15 percent for the next three years. After that, without additional viral exposure, the managers expect that the growth rate will drop to 3.5 percent and remain at that level thereafter. If the required return is 8.5 percent and the company just paid a dividend of $2.15, what is the current share price? (Hint: Calculate the first four dividends.) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) D₁ D2 D3 D4 P3 PO $ LA LA LA LA LA $ $ $ Pixie Apparel, Inc. is experiencing phenomenal growth due to a viral video showing Kim Karddashian using wearing one of the company's blouses. As a result, the company expects the dividends to grow at a rate of 15 percent for the next three years. After that, without additional viral exposure, the managers expect that the growth rate will drop to 3.5 percent and remain at that level thereafter. If the required return is 8.5 percent and the company just paid a dividend of $2.15, what is the current share price? (Hint: Calculate the first four dividends.) (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) D₁ D2 D3 D4 P3 PO $ LA LA LA LA LA $ $ $

Answer rating: 100% (QA)

First lets calculate the dividends for the next three years D1 D0 1 gr... View the full answer