Question
Dividends per share for the Crawford Corporation are expected to grow at an annual rate of 25 percent for 4 years. After this period of
Dividends per share for the Crawford Corporation are expected to grow at
an annual rate of 25 percent for 4 years. After this period of time,
dividends should grow at a normal rate of 5 percent. Crawford's last
dividend was $0.75 per share. If Crawford's current price is $25 per share,
what is its current required rate of return? Should you invest in Crawford's
stock if your required rate of return is 10 percent? Why?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the current required rate of return for Crawford Corporation we can use the dividend discount model DDM The DDM formula is Current Stock ...
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Step: 2
Step: 3
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Contemporary Financial Management
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
10th Edition
978-0324289114, 0324289111
