Question
(1) Cuban Corporation will pay a dividend of $3.02 per share next year. The company pledges to increase its dividend by 5.5 percent per year
(1) Cuban Corporation will pay a dividend of $3.02 per share next year. The company pledges to increase its dividend by 5.5 percent per year indefinitely. If you require a return of 10 percent on your investment, how much will you pay for the companys stock today? (2) Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $2.85 next year. The growth rate in dividends for all three companies is 5 percent. The required return for each companys stock is 7 percent, 10 percent, and 13 percent, respectively. What is the stock price for each company?
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