A firm has just paid (the moment before valuation) a dividend of 88C and is expected to exhibit a growth rate of 15% for five at the end of the fifth year its growth was to decline linearly for four years to reach the steady-state 5% growth rate. At the e the ninth year, the payout ratio will increase from its present 30% to 50%. If the appropriate discount rate is 12%, what is the of the stock? 32.04 33.04
A firm has just paid (the moment before valuation) a dividend of 88C and is expected to exhibit a growth rate of 15% for five at the end of the fifth year its growth was to decline linearly for four years to reach the steady-state 5% growth rate. At the e the ninth year, the payout ratio will increase from its present 30% to 50%. If the appropriate discount rate is 12%, what is the of the stock? 32.04 33.04
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
Problem 1PS
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Transcribed Image Text:A firm has just paid (the moment before valuation) a dividend of 88C and is expected to exhibit a growth rate of 15% for five years,
at the end of the fifth year its growth was to decline linearly for four years to reach the steady-state 5% growth rate. At the end of
the ninth year, the payout ratio will increase from its present 30% to 50%. If the appropriate discount rate is 12%, what is the value
of the stock?
A) 32.04
B) 33.04
34.04
35.04
36.04
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