Morning Dew, Inc., has an odd dividend policy. The company hasjust paid a dividend of $5 per share and has announced that it willincrease the dividend by $6 per share for each of the next fiveyears, and then never pay another dividend. If you require a returnof 12 percent on the companyâs stock, how much will you pay for ashare today?
Morning Dew, Inc., has an odd dividend policy. The company hasjust paid a dividend of $5 per share and has announced that it willincrease the dividend by $6 per share for each of the next fiveyears, and then never pay another dividend. If you require a returnof 12 percent on the companyâs stock, how much will you pay for ashare today?
Related questions
Metallica Bearings, Inc., is a young start-up company. Nodividends will be paid on the stock over the next 7 years becausethe firm needs to plow back its earnings to fuel growth. Thecompany will pay a $13 per share dividend in 8 years and willincrease the dividend by 6 percent per year thereafter. |
| Required: |
If the required return on this stock is 12 percent, what is thecurrent share price? (Do not round your intermediatecalculations.) |
$102.91
$100.95
$93.11
$87.51
$98.01
