The Cricket Co. just paid a dividend of $3.14 per share on its stock. The dividends are
Question:
The Cricket Co. just paid a dividend of $3.14 per share on its stock. The dividends are expected to grow at a constant rate of 4 percent per year indefinitely. If investors require a return of 11 percent on the stock, what is the current price? What will the price be in 3 years? In 15 years?
Step by Step Answer:
The constant dividend growth model is P t D t 1 gR g So the price of the stock today is P 0 D 0 1 gR ...View the full answer
Corporate Finance Core Principles And Applications
ISBN: 9781260571127
6th Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Related Video
Constant Growth Dividend Discount Model – This dividend discount model assumes dividends grow at a fixed percentage. They are not variable and are consistent throughout. Variable Growth Dividend Discount Model or Non-Constant Growth model
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