Rosendale Clothiers has decided to make significant reinvestments in its operations. As a result it will be

Question:

Rosendale Clothiers has decided to make significant reinvestments in its operations. As a result it will be suspending dividend payments for 2 years. It anticipates paying a dividend again in year 3 in the amount of $0.80 per share. The dividend will then be expected to grow by 20% per year for the following 2 years, then growing at a long run rate of 4% thereafter. If the stock's required return is 11%, what is the value of Rosendale's stock at present?

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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