You are considering the purchase of a common stock that just paid a dividend of $0.88 yesterday.
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Question:
You are considering the purchase of a common stock that just paid a dividend of $0.88 yesterday. You expect this stock to have a growth rate of 11.25% for the next 3 years. The long-run normal growth rate after year 3 is expected to be 4.15%. If you require a 9.33% rate of return, how much would you be willing to pay for this stock?
Related Book For
Financial Accounting Tools for Business Decision Making
ISBN: 978-1119368458
7th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
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