An analyst estimates that Cheyenne Co. will pay the following dividends: D1 = $3.0000, D2 = $37.500

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An analyst estimates that Cheyenne Co. will pay the following dividends: D1 = $3.0000, D2 = $37.500 and D3 = $4.3125. The analyst also estimates that the required rate of return on Cheyenne’s stock is 12.2 percent. After the third dividend, the dividend is expected to grow by 8 percent per year forever. What is the price of the stock today?

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...
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