Ritter Incorporated just paid a dividend of $2 per share. Its management team has just announced a

Question:

Ritter Incorporated just paid a of $2 per share. Its management team has just announced a technological breakthrough that is expected to result in a temporary increase in sales, profits, and dividends. Analysts expect the firm’s per-share dividends to be $2.50 next year, $3 in two years, and $3.50 in three years. After that, normal growth of 5 percent is expected to resume. If shareholders expect a 15-percent return on their investment in Ritter, what should the firm’s stock price be?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... 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...