Question
GOX is a public company that has a payout ratio of 0%, however, it is expected to pay a dividend of $3.5 per share in
GOX is a public company that has a payout ratio of 0%, however, it is expected to pay a dividend of $3.5 per share in 3 years from now, which will grow at 2% forever. The required rate of return on GOXs stock is 7%.
a) What should its stock price be today?
b) Assume that a year from now the CEO of GOX announces that the growth rate is revised down to 1%. What should be GOXs stock price
in three years from now?
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Inclusive And Sustainable Finance Leadership Ethics And Culture
Authors: Atul K. Shah
1st Edition
0367759403, 978-0367759407
