Dillon Mechanical Inc.s first dividend of $2 per share is expected to be paid six years from

Question:

Dillon Mechanical Inc.’s first dividend of $2 per share is expected to be paid six years from today. From then on, dividends will grow by 10 percent per year for five years. After five years, the growth rate will then slow to 5 percent per year in perpetuity. Assume that Dillon's required rate of return is 15 percent. What is the price of a share of Dillon Mechanical 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...