Quantitative Problem 3: Assume today is December 31, 2019. Imagine Works Inc. just paid a dividend of S1.10 per share at the end of 2019. The dividend is expected to grow at 15% per year for 3 years, after which time it is expected to grow at a constant rate of 5% annually. The company's cost of equity (rs) is 9.5 % . Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2019) ? Do not round intermediate calculations. Round your answer to the nearest cent.
Quantitative Problem 3: Assume today is December 31, 2019. Imagine Works Inc. just paid a dividend of S1.10 per share at the end of 2019. The dividend is expected to grow at 15% per year for 3 years, after which time it is expected to grow at a constant rate of 5% annually. The company's cost of equity (rs) is 9.5 % . Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2019) ? Do not round intermediate calculations. Round your answer to the nearest cent.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Quantitative Problem 3: Assume today is December 31, 2019. Imagine Works Inc. just paid a dividend of $1.10 per share at the end of 2019. The dividend is expected to
grow at 15% per year for 3 years, after which time it is expected to grow at a constant rate of 5% annually. The company's cost of equity (rs) is 9.5 %. Using the dividend
growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2019) ? Do not round intermediate calculations.
Round your answer to the nearest cent.
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