Question
ABC, Inc. currently pays no dividends. Today, the firm announced that it will pay its first dividend of $1 per share in four years, then
ABC, Inc. currently pays no dividends. Today, the firm announced that it will pay its first dividend of $1 per share in four years, then $1.50 in each of the following three years, and the subsequent dividends are expected to grow at a constant rate of 5 percent per year. What is the stock price today if the cost of capital is 10%?
| $31.50 | ||
| $34.73 | ||
| $19.40 | ||
| $17.93 |
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Financial Management Principles And Practice
Authors: Timothy J. Gallagher, Joseph D. Andrew
3rd Edition
0131768824, 978-0131768826
