Alpha Inc has just paid a dividend of $0.50 per share. The dividends are expected to grow

Question:

Alpha Inc has just paid a dividend of $0.50 per share. The dividends are expected to grow at 24% per year for the next two years and at 8% per year thereafter. If the required rate of return in the stock is 16%, calculate the current value of the stock.

A) $1.11

B) $7.71

C) $8.82

D) None of the above

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...