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A company plans to issue a dividend next year (t = 1) for $3 per share, another dividend the year after (t = 2) for $4 per share, and another dividend after that ( t = 3) for $2 per share. The dividends are expected to increase at the constant growth rate of 5% after the third year. If shareholders require a return of 8%, what is this company's price per share today (t = 0)? $63.36

A company plans to issue a dividend next year (t = 1) for $3 per share, another dividend the year after (t = 2) for $4 per share, and another dividend after that ( t = 3) for $2 per share. The dividends are expected to increase at the constant growth rate of 5% after the third year. If shareholders require a return of 8%, what is this company's price per share today (t = 0)? $63.36

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A company plans to issue a dividend next year (t = 1) for $3 per share, another dividend the year after (t = 2) for $4 per share, and another dividend after that ( t = 3) for $2 per share. The dividends are expected to increase at the constant growth rate of 5% after the third year. If shareholders require a return of 8%, what is this company's price per share today (t = 0)? $63.36
Transcribed Image Text:A company plans to issue a dividend next year (t = 1) for $3 per share, another dividend the year after (t = 2) for $4 per share, and another dividend after that ( t = 3) for $2 per share. The dividends are expected to increase at the constant growth rate of 5% after the third year. If shareholders require a return of 8%, what is this company's price per share today (t = 0)? $63.36
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