A company just paid a dividend of $4 per share. The dividends are expected to grow at a constant rate of 5% per year indefinitely. If the investors require a return of 9% on the company's share, what is the current price of the share? What will the price be in three years?

A company just paid a dividend of $4 per share. The dividends are expected to grow at a constant rate of 5% per year indefinitely. If the investors require a return of 9% on the company's share, what is the current price of the share? What will the price be in three years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 12P

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