Storico Company just paid a dividend of $3.65 per share. The company will increase its dividend by 20 percent next year and then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on the company's stock is 12 percent, what will a share of stock sell for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g... 32.16.) Stock price $ 3,378.67

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
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Storico Company just paid a dividend of $3.65 per share. The company will increase its
dividend by 20 percent next year and then reduce its dividend growth rate by 5
percentage points per year until it reaches the industry average of 5 percent dividend
growth, after which the company will keep a constant growth rate forever. If the required
return on the company's stock is 12 percent, what will a share of stock sell for today? (Do
not round intermediate calculations and round your answer to 2 decimal places, e.g.,
32.16.)
Stock price
$ 3,378.67
Transcribed Image Text:Storico Company just paid a dividend of $3.65 per share. The company will increase its dividend by 20 percent next year and then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on the company's stock is 12 percent, what will a share of stock sell for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock price $ 3,378.67
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