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Dividend Growth Model: Please show how to get the answer in Yellow Billy's Bean Farm went public exactly 14 years ago at a price of
Dividend Growth Model: Please show how to get the answer in Yellow
Billy's Bean Farm went public exactly 14 years ago at a price of $5.00 per share. Exactly 5 years ago, they paid their first dividend of $.25 and have increased that amount by 5% each year until the current dividend just paid. This upcoming year, they plan to issue a special dividend of $5 to for each share in recognition of purchase of a competing firm. The next year, they plan to pay a dividend that is 8% higher than the current dividend. They also plan to continue to grow at a rate of 8% for the foreseeable future beyond that. What should the current price of a share of stock be if Billy has a required return of 14.5%? $10.15 $9.00 $8.73 $7.89Step by Step Solution
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