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28 Sep 2019
Assume that the average firm in your company's industry isexpected to grow at a constant rate of 4% and that its dividendyield is 8%. Your company is about as risky as the average firm inthe industry and just paid a dividend (D0) of $2. You expect thatthe growth rate of dividends will be 50% during the first year(g0,1 = 50%) and 30% during the second year (g1,2 = 30%). AfterYear 2, dividend growth will be constant at 4%. What is theestimated value per share of your firmâs stock? Do not roundintermediate calculations. Round your answer to the nearestcent.
Assume that the average firm in your company's industry isexpected to grow at a constant rate of 4% and that its dividendyield is 8%. Your company is about as risky as the average firm inthe industry and just paid a dividend (D0) of $2. You expect thatthe growth rate of dividends will be 50% during the first year(g0,1 = 50%) and 30% during the second year (g1,2 = 30%). AfterYear 2, dividend growth will be constant at 4%. What is theestimated value per share of your firmâs stock? Do not roundintermediate calculations. Round your answer to the nearestcent.
Sixta KovacekLv2
28 Sep 2019
