A common stock just paid a dividend of $1.2. The dividend is expected to grow at 8% for 5 years, then it will grow at 4% in perpetuity. Calculate the stock value. The discount rate is 12%. (Hint: dividend states in 3 decimals and price states in 2 decimals)
A common stock just paid a dividend of $1.2. The dividend is expected to grow at 8% for 5 years, then it will grow at 4% in perpetuity. Calculate the stock value. The discount rate is 12%. (Hint: dividend states in 3 decimals and price states in 2 decimals)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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A common stock just paid a dividend of $1.2. The dividend is expected to grow
at 8% for 5 years, then it will grow at 4% in perpetuity. Calculate the stock value. The
discount rate is 12%. (Hint: dividend states in 3 decimals and price states in 2 decimals)
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