Hello tutor give correct answer the general accounting question Lohn Corporation is expected to pay thefollowing dividends over the next four years:$11, $7, $4, and $3.75. Afterward, thecompany pledges to maintain a constant 7percent growth rate in dividends forever. If therequired return on the stock is 12 percent, whatis the current share price?

Step 1: Define Gordon Growth ModelIt is a financial model used by an investor to determine the…

Answered: Lohn Corporation is expected to pay the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 17P

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Lohn Corporation is expected to pay the following dividends over the next four years: $11, $7, $4, and $3.75. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever. If the required return on the stock is 12 percent, what is the current share price?