Suppose firm X just paid its annual dividend of $2.00 per share. You expect that the firm
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Question:
Suppose firm X just paid its annual dividend of $2.00 per share. You expect that the firm will continue to pay $2.00 per share (per year) for the next 10 years (times t=1 through 10), after which point you expect that the annual dividend per share will grow by 12 percent every year thereafter (forever).
If the required rate of return is 15 percent, what is the current price per share?
Round all interim work to at least 4 decimal places.
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