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4 decimal places in the middle answer and 2 in the final answer (1) Suppose a company just paid a dividend of $4. Its manager
4 decimal places in the middle answer and 2 in the final answer
(1) Suppose a company just paid a dividend of $4. Its manager promises to pay annual dividend growing at 6% per year. If the required return is 12% (in EAR), what would the current price be? (2) Now assume the manager has decided to pay quarterly dividends instead of annual dividends. It has just paid a dividend of $1. The next dividend will be 3 months from now, with value equal to $1*1.0614, and will grow at an annual rate of 6%. That is, each dividend payment will be 1.064 times the previous one. What is the share price now? (3) Now assume the dividend will grow more slowly at a rate of 2% per year from the 40th quarterly dividend. That is, the 41" dividend will be equal to the 40th dividend multiplied by 1.021/4. What is the share price now Step by Step Solution
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