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You are trying to value the stock of Cowbell Inc. You know that the firm only uses dividends to return cash to its investors and you have forecasted the dividends for the 4 years (see table below). You believe that dividends will grow at a constant rate of 3% each year after year 4. The cost of equity is 10%. Given this information estimate the share price for Cowbell Inc. Round your answer to two decimals (do not enter the S-symbol in your answer). Dividend Forecasts Year 1 Dividend per Share (in $)1.0 23 4 1.3 1.7 2.1 You are trying to value the stock of Cowbell Inc. You know that the firm only uses dividends to return cash to its investors and you have forecasted the dividends for the 4 years (see table below). You believe that dividends will grow at a constant rate of 3% each year after year 4. The cost of equity is 10%. Given this information estimate the share price for Cowbell Inc. Round your answer to two decimals (do not enter the S-symbol in your answer). Dividend Forecasts Year 1 Dividend per Share (in $)1.0 23 4 1.3 1.7 2.1
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Answer rating: 100% (QA)
To estimate the share price for Cowbell Inc we can use the dividend discount model DDM which va... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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