Macro Systems just paid an annual dividend of $0.20 per share. Its dividend is expected to double for the next four years (D1 through D4), after which it will grow at a more modest pace of 2% per year. If the required return is 12%, what is the current price?

Current price refers to the indication of the price at the present moment in time which is said to…

Answered: current price

Business

Finance

current price

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

Macro Systems just paid an annual dividend of $0.20 per share. Its dividend is expected to double for the next four years (D₁ through D₄), after which it will grow at a more modest pace of 2% per year. If the required return is 12%, what is the current price?

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