Lohn Corporation is expected to pay the following dividends over the next four years: $11, $9, $6, and $5. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 12 percent, what is the current share price?

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, $9, $6, and $5. Afterward, the company pledges to maintain a constant 5 percent
growth rate in dividends forever.
If the required return on the stock is 12 percent, what is the current share price?
Transcribed Image Text:Lohn Corporation is expected to pay the following dividends over the next four years: $11, $9, $6, and $5. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 12 percent, what is the current share price?
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