Question
Deja Brew Coffee Manufacturing Corporation is expected to pay the following dividends over the next six years: $5, $13, $18, $11, $21 and $3.45. Afterward,
Deja Brew Coffee Manufacturing Corporation is expected to pay the following dividends over the next six years: $5, $13, $18, $11, $21 and $3.45. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends, forever.
If the required return on the stock is 9% percent, what is the share price in year 6, P6
AND What is the current share price, P0?
DATA: At year 6, the dividends begin to grow at a constant rate which will continue into the future.IS IT POSSIBLE TO TAKE The discount or take the present value of P6 and all dividend payments and then sum them to arrive at the current bond price P0?
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown, Sanford J. Leeds
11th Edition
1305262999, 1305262997, 035726164X, 978-1305262997
