Quinoa Farms just paid a dividend of $2.95 on its stock. The growth rate in dividends is
Question:
Quinoa Farms just paid a dividend of $2.95 on its stock. The growth rate in dividends is expected to be a constant 3.4 percent per year indefinitely. Investors require a return of 15 percent for the first three years, a return of 13 percent for the next three years, and a return of 11 percent thereafter. What is the current share price?
Step by Step Answer:
In calculating the value of the current share price ...View the full answer
Fundamentals Of Corporate Finance
ISBN: 9781265553609
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Related Video
This model assumes that the required rate of return will remain the same for the foreseeable future and also assumes that the growth rate is going to be constant. The same results will be obtained using the sustainable growth rate formula that states g = b x ROI
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