Memphis Co stock will pay its next dividend of $4.50 exactly one year from now. After this first dividend, future dividends will grow at -3% for each of the subsequent 2 years and then 3% per year every year thereafter. If the discount rate is 12.6%, what is the intrinsic value of Memphis stock? Round your answer to the nearest penny.

Memphis Co stock will pay its next dividend of $4.50 exactly one year from now. After this first dividend, future dividends will grow at -3% for each of the subsequent 2 years and then 3% per year every year thereafter. If the discount rate is 12.6%, what is the intrinsic value of Memphis stock? Round your answer to the nearest penny.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 13P

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