Finance

General Cereal common stock dividends have been growing at an annual rate of 7percentperyearoverthepast10years.Currentdividendsare$1.70pershare. What is the current value of a share of this stock to an investor who requires a 12 percent rate of return if the following conditions exist?

a. Dividends are expected to continue growing at the historic rate for the foresee- able future. b.

The dividend growth rate is expected to increase to 9 percent per year.

c. The dividend growth rate is expected to decrease to 6.5 percent per year.