Question
CraigTool Company just paid a dividend of $1.25 per share. The company plans to increase its dividend by 24% next year and then reduce its
CraigTool Company just paid a dividend of $1.25 per share. The company plans to increase its dividend by 24% next year and then reduce its dividend growth rate by 10% per year until it reaches the industry average of 4% dividend growth, after which it is expected the company will maintain a constant growth rate forever. The stock has a required return of 8%. What dividend amount is this company's stock expected to pay 3 years from now?
Do not round intermediate calculations. Round final answer to two decimal places.
Please show all your work and show your steps. Clearly explain your answer and the steps you take. If writing, please write neatly, no cursive, and write in a linear fashion.
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