Question
Cisco Tech is a growth company that has been paying a dividend of $1.00 per share for the last ten years and has recently paid
Cisco Tech is a growth company that has been paying a dividend of $1.00 per share for the last ten years and has recently paid the same $1 for the current year. Cisco has just created "new tech" that should revolutionize artificial intelligence and therefore has decided to pay higher dividends two years from today. That dividend will be $3.00, followed by a $6.00 dividend the next year, and a $9.00 dividend the following year. After year 4, the dividends are expected to grow by 9% annually. Cisco's shareholders require a 14% rate of return. The value of the Cisco shares is closest to: a. $93.90 b. $112.92 c. $114.46 d. $128.73
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