Question
An analyst has been following American Dream stock. He projects the following dividends for the next three years: YEAR 1 2 3 Dividend $1.64 $2.55
An analyst has been following American Dream stock. He projects the following dividends for the next three years:
| YEAR | 1 | 2 | 3 |
|---|---|---|---|
| Dividend | $1.64 | $2.55 | $2.99 |
The analyst notes that American Dream stock has a required return of 9.78%. The analyst projects that dividends will grow at a constant rate of 2.00% per year after year 3.
What is the current price of the stock if his assumptions are correct?
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Financial Management For Public Health And Not For Profit Organizations
Authors: Steven A. Finkler
2nd Edition
0131471988, 978-0131471986
