Leisure Lodge Corporation is expected to pay the following dividends over the next four years: $25.00, $15.00, $6.60 and $3.10. Afterwards, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 12 percent, what is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Share price
Leisure Lodge Corporation is expected to pay the following dividends over the next four years: $25.00, $15.00, $6.60 and $3.10. Afterwards, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 12 percent, what is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Share price
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 2P
Related questions
Question
34) What am I doing wrong? The correct answer is 75.75 but I am not getting the right answer
![Leisure Lodge Corporation is expected to pay the following dividends
over the next four years: $25.00, $15.00, $6.60 and $3.10. Afterwards,
the company pledges to maintain a constant 6 percent growth rate in
dividends forever. If the required return on the stock is 12 percent, what
is the current share price? (Do not round intermediate calculations.
Round your answer to 2 decimal places.)
Share price
D1
$25 GROWTH
0.06
D2
$15 Required return
0.12
D3
$6.60
D4
$3.10
Share price
$42.71](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F531c135e-43c5-40a3-957b-6527d4057224%2F6b8dffb8-7b17-4cef-9ac1-66cb546415c1%2F2cv728_processed.png&w=3840&q=75)
Transcribed Image Text:Leisure Lodge Corporation is expected to pay the following dividends
over the next four years: $25.00, $15.00, $6.60 and $3.10. Afterwards,
the company pledges to maintain a constant 6 percent growth rate in
dividends forever. If the required return on the stock is 12 percent, what
is the current share price? (Do not round intermediate calculations.
Round your answer to 2 decimal places.)
Share price
D1
$25 GROWTH
0.06
D2
$15 Required return
0.12
D3
$6.60
D4
$3.10
Share price
$42.71
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
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.Recommended textbooks for you
![Intermediate Financial Management (MindTap Course…](https://www.bartleby.com/isbn_cover_images/9781337395083/9781337395083_smallCoverImage.gif)
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
![EBK CFIN](https://www.bartleby.com/isbn_cover_images/9781337671743/9781337671743_smallCoverImage.jpg)
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
![Intermediate Financial Management (MindTap Course…](https://www.bartleby.com/isbn_cover_images/9781337395083/9781337395083_smallCoverImage.gif)
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
![EBK CFIN](https://www.bartleby.com/isbn_cover_images/9781337671743/9781337671743_smallCoverImage.jpg)
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT