A stock just paid a dividend of $2.34. The dividend is expected to grow at 21.23% for five years and then grow at 4.20% thereafter. The required return on the stock is 12.23%. What is the value of the stock?

A stock just paid a dividend of $2.34. The dividend is expected to grow at 21.23% for five years and then grow at 4.20% thereafter. The required return on the stock is 12.23%. What is the value of the stock?

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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Question

A stock just paid a dividend of $2.34. The dividend is expected to grow at 21.23% for five years and then grow at 4.20% thereafter. The required return on the stock is 12.23%. What is the value of
the stock?

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