6.2.3 - Nonconstant Dividend Growth Rate Stock Valuation 1) Your company is estimated to make dividends payments
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6.2.3 - Nonconstant Dividend Growth Rate Stock Valuation 1) Your company is estimated to make dividends payments of $2.8 next year, $3 the year after, and $4.8 in the year after that. The dividends will then grow at a constant rate of 7% per year. If the discount rate is 11% then what is the current stock price? 2) A stock will pay no dividends for the next 5 years. Then it will pay a dividend of $4 growing at 4%. The discount rate is 12%. What should be the current stock price?
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