Question
I have the anwser, I just need to know how to work it and the formulas used. UPS currently pays an annual dividend of $3.00
I have the anwser, I just need to know how to work it and the formulas used.
UPS currently pays an annual dividend of $3.00 per share (and you just missed the annual dividend). Analysts are projecting earnings growth of 10% per year over the next 5 years, and you decide that you expect UPS dividends will also grow at 10% per year over the next 5 years. In addition, you expect dividend growth to slow down to 3% per year after the fifth year. Your required return on UPS stock is 8%. What should you be willing to pay for a share of UPS today?
Ans: 83.59
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