SG Ltd. has historically paid a dividend of $2.50 to its shareholders semi-annually. The company has decided however that it will only maintain this policy for two more years, after which they will switch to an annual dividend that follows the constant growth rate of dividend policy. Determine the current price of the stock if the annual dividend growth rate will be set to 2% by the company and the nominal rate of return in the market is 9%

SG Ltd. has historically paid a dividend of $2.50 to its shareholders semi-annually. The company has decided however that it will only maintain this policy for two more years, after which they will switch to an annual dividend that follows the constant growth rate of dividend policy. Determine the current price of the stock if the annual dividend growth rate will be set to 2% by the company and the nominal rate of return in the market is 9%

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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