Suppose TB Pirates, Inc is expected to pay a $2 dividend in one year If the dividend is expected to grow at 5 per year and the required return is 20 , what is the price today P 0 2 ( 2 05) $13 33 My question isWhy isnt the $2 in the numerator multiplied by (1 05) in this example If P 0 D 1 r g Isn't D 1 $2 1 05 and D 0 is $2

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Question: Suppose TB Pirates, Inc. is expected to pay a $2 dividend in one year. If the dividend is expected to grow at 5% per year

Suppose TB Pirates, Inc. is expected to pay a $2 dividend in one year. If the dividend is expected to grow at 5% per year and the required return is 20%, what is the price today?

P₀ = 2 / (.2 - .05) = $13.33 My question isWhy isnt the $2 in the numerator multiplied by (1.05) in this example?

If P₀= D₁/ r - g

Isn't D₁$2*1.05 ? and D₀is $2

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