Michael’s, Inc. just paid $1.80 to their shareholders as the annual dividend. Simultaneously, the company announced that future dividends would be increasing by 5.0 percent forever. If you require an 4 percent rate of return, how much are you willing to pay to purchase one share of Michael’s stock?

Michael’s, Inc. just paid $1.80 to their shareholders as the annual dividend. Simultaneously, the company announced that future dividends would be increasing by 5.0 percent forever. If you require an 4 percent rate of return, how much are you willing to pay to purchase one share of Michael’s stock?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

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