At the end of the year 2020 Brown Bear Corporation paid dividends $3.24 per share. The company projects the following annual growth rates in dividends: Year Growth Rate 2021 15% 2022 15% 2023 15% 2024 9% 2025 6% 2026 4% From year 2027 onward growth in dividends is expected to remain constant at 3% per year. The required rate of return for this stock is 9.20%. Calculate the economic value of the stock now (end of the Year 2020).

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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At the end of the year 2020 Brown Bear
Corporation paid dividends $3.24 per share.
The company projects the following annual
growth rates in dividends:
Year Growth Rate
2021 15%
2022 15%
2023 15%
2024 9%
2025 6%
2026 4%
From year 2027 onward growth in dividends
is expected to remain constant at 3% per year.
The required rate of return for this stock is
9.20%.
Calculate the economic value of the stock
now (end of the Year 2020).
Transcribed Image Text:At the end of the year 2020 Brown Bear Corporation paid dividends $3.24 per share. The company projects the following annual growth rates in dividends: Year Growth Rate 2021 15% 2022 15% 2023 15% 2024 9% 2025 6% 2026 4% From year 2027 onward growth in dividends is expected to remain constant at 3% per year. The required rate of return for this stock is 9.20%. Calculate the economic value of the stock now (end of the Year 2020).
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