A company does not currently pay a dividend but is expected to begin to do so in
Question:
A company does not currently pay a dividend but is expected to begin to do so in five years (at t=5). The first dividend is expected to be $4.00 and to be received five years from today. That dividend is expected to grow at 6 percent into perpetuity. The required return is 10 percent. What is the estimated current intrinsic value?
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The analyst can value the share in two pieces The sum of ...View the full answer
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Related Book For 
Investments Principles Of Portfolio And Equity Analysis
ISBN: 9780470915806
1st Edition
Authors: Michael McMillan, Jerald E. Pinto, Wendy L. Pirie, Gerhard Van De Venter, Lawrence E. Kochard
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