Question
42. Jazper, Inc. just paid a dividend of $1.88 per share (that is, D0 = 1.88). If the growth rate in Jazpers dividends is expected
42. Jazper, Inc. just paid a dividend of $1.88 per share (that is, D0 = 1.88). If the growth rate in Jazpers dividends is expected to shrink every year (forever) by 6 percent (that is, g = -6.0% = -.06) and if Jazpers required rate of return on equity is 22.6%, what is the current equilibrium price of Jazpers stock?
43. Malcolm Manufacturing, Inc. just paid a $2.00 annual dividend (that is, D0 = 2.00). There will be no dividend payment for the next two years (i.e., at t = 1 and t = 2). In year three (t = 3), the dividend is expected to be $5.00. The dividend will then grow at 10% annually for the next 3 years (i.e., at t = 4, t = 5 and t = 6) and thereafter (i.e., beginning at t = 7) dividends will grow at a rate of 3% annually forever. Assuming a required return of 14%, what is the current price of the stock?
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