A stock will not pay any dividends next year or two years from now.  Three years from now, it is expected to pay a dividend of $2.4, and then a dividend of $3.2 four years from now.  The growth rate in dividends after that point is expected to be 7% annually.  The required return on the stock is 13%.  The estimated price per share of the stock 11 years from now should be $_________. Do not round any intermediate work, but round your final answer to 2 decimal places (ex: $12.34567 should be entered as 12.35).  Do not enter the $ sign.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 13P
icon
Related questions
icon
Concept explainers
Topic Video
Question

A stock will not pay any dividends next year or two years from now.  Three years from now, it is expected to pay a dividend of $2.4, and then a dividend of $3.2 four years from now.  The growth rate in dividends after that point is expected to be 7% annually.  The required return on the stock is 13%.  The estimated price per share of the stock 11 years from now should be $_________.

Do not round any intermediate work, but round your final answer to 2 decimal places (ex: $12.34567 should be entered as 12.35).  Do not enter the $ sign.

Expert Solution
steps

Step by step

Solved in 4 steps with 4 images

Blurred answer
Knowledge Booster
Stock Valuation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Financial Management (MindTap Course…
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning