CX Enterprises has the following expected dividends: $1.13 in one year, $1.21 in two years, and $1.28 in three years. After that, its dividends are expected to grow at 4.4% per year forever (so that year 4's dividend will be 4.4% more than $1.28 and so on). If CX's equity cost of capital is 12.2%, what is the current price of its stock?
CX Enterprises has the following expected dividends: $1.13 in one year, $1.21 in two years, and $1.28 in three years. After that, its dividends are expected to grow at 4.4% per year forever (so that year 4's dividend will be 4.4% more than $1.28 and so on). If CX's equity cost of capital is 12.2%, what is the current price of its 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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Transcribed Image Text:CX Enterprises has the following expected dividends: $1.13 in one year, $1.21 in
two years, and $1.28 in three years. After that, its dividends are expected to
grow at 4.4% per year forever (so that year 4's dividend will be 4.4% more than
$1.28 and so on). If CX's equity cost of capital is 12.2%, what is the current price
of its stock?
The price of the stock will be $
44
FOMU NE
226 227
(Round to the nearest cent.)
230-2
MARAN DAN JU
CHAR
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