Question
A common stock just paid a dividend of $5 per share. The dividend is expected to grow each year at 6% over the next 20
A common stock just paid a dividend of $5 per share. The dividend is expected to grow each year at 6% over the next 20 years, at 4 % beyond year 20 until year 40, and at 2% in perpetuity beyond year 40.
What would be the stock intrinsic value today if the discount rate were 12%?
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Step: 1
1 Calculate the present value of dividends for the first 20 years with a 6 growth rate First we need ...
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Financial Management Theory and Practice
Authors: Eugene F. Brigham, Michael C. Ehrhardt
15th edition
130563229X, 978-1305632301, 1305632303, 978-0357685877, 978-1305886902, 1305886909, 978-1305632295
