Starkiller Base Inc. expects to have a changing dividend policy over the next few years starting with the dividend that they just paid of $8.90. In the following year their dividend will grow by 18.7% and in the year after by 11.7%. Following that they expect their dividends to continue growing at a constant rate of 4.7% forever. If the required rate of return for Starkiller Base is 16.5% per year, what is the price today of their shares? Answer to the nearest penny.
Starkiller Base Inc. expects to have a changing dividend policy over the next few years starting with the dividend that they just paid of $8.90. In the following year their dividend will grow by 18.7% and in the year after by 11.7%. Following that they expect their dividends to continue growing at a constant rate of 4.7% forever. If the required rate of return for Starkiller Base is 16.5% per year, what is the price today of their shares? Answer to the nearest penny.
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:Starkiller Base Inc. expects to have a changing dividend policy over the next few years
starting with the dividend that they just paid of $8.90. In the following year their dividend
will grow by 18.7% and in the year after by 11.7%. Following that they expect their
dividends to continue growing at a constant rate of 4.7% forever. If the required rate of
return for Starkiller Base is 16.5% per year, what is the price today of their shares? Answer
to the nearest penny.
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