Question
Bubble.com Inc. currently pays no dividends. You overhear the CFO tell the CEO that the plan is to begin paying annual dividends in 5 years.
Bubble.com Inc. currently pays no dividends. You overhear the CFO tell the CEO that the plan is to begin paying annual dividends in 5 years. The first dividend will be $2 and dividends are expected to grow at 5% in perpetuity thereafter. Given a required return of 11%, what should the price of the stock be today?
| $24.24 | ||
| $19.78 | ||
| $21.96 | ||
| $20.77 |
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Financial Management Principles And Practice
Authors: Timothy Gallagher
6th Edition
1930789157, 978-1930789159
