You are an investor currently considering purchasing shares of Rody Inc. You expect them to pay a dividend of $2.13 a share and those dividends to grow at 2% a year indefinitely, however, you don’t expect that first dividend of $2.13 until the end of year 4. Based on your analysis, what would be a fair value today for the shares of Lazz Co. given a 50% Debt to Cap ratio, a 3% after-tax cost of debt and a 6% cost of equity?

Answer rating: 100% (QA)

Calculation of Fair Value for Rody Incs Shares In order to determine the fair value of Rody Incs sha... View the full answer