Ms Manners Catering (MMC) has paid a constant $1 50 per share dividend to its common stockholders for the past 25 years Beginning with the next dividend, MMC expects to increase the dividend at a constant rate equal to 2 percent per year into perpetuity Investors require a 12 percent rate of return...

Ms. Manners Catering (MMC) has paid a constant $1.50 per share dividend to its common stockholders for

Question:

Ms. Manners Catering (MMC) has paid a constant $1.50 per share to its common stockholders for the past 25 years. Beginning with the next MMC expects to increase the at a constant rate equal to 2 percent per year into perpetuity. Investors require a 12 percent rate of return to purchase MMC’s common stock. What is the market value of MMC’s common stock?

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...