Cathay Pacific Airways (HK.00293) just paid a dividend of $2.50 per share. The company will increase its dividend by 8% next year and will then reduce its dividend growth rate by 2% per year until it reaches the industry average of 2% dividend growth, after which the company will keep a constant growth rate forever . What is the price of the stock today given a required return of 12%

Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter7: Valuation Of Stocks And Corporations
Section: Chapter Questions
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Cathay Pacific Airways (HK.00293) just paid a dividend of $2.50 per share. The
company will increase its dividend by 8% next year and will then reduce its dividend
growth rate
by 2% per year until it reaches the industry average of 2% dividend growth,
after which the company will keep a constant growth rate forever
.
What is the price of the stock today given a required return of 12%

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