Question
Because Vigorous Growth Company retains and invests all of its earnings (in positive NPVprojects!), the firm currently pays no dividends. Investors believe that the firm
Because Vigorous Growth Company retains and invests all of its earnings (in positive NPVprojects!), the firm currently pays no dividends. Investors believe that the firm will pay itsfirst dividend (of $12 per share) 20 years from today. Investors then believe the dividend willremain constant at $12 per share, forever. Given a required return of 6%, what is the stockprice today?
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Financial Management For Public Health And Not For Profit Organizations
Authors: Steven A. Finkler
2nd Edition
0131471988, 978-0131471986
