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Imagine a firm that plans to distribute a dividend of $4.00 per year for the next two years. Due to potential financial issues, the CEO
Imagine a firm that plans to distribute a dividend of $4.00 per year for the next two years. Due to potential financial issues, the CEO wants to stop the dividend payments in Year 3 and Year 4. At Year 5, this firm will restart its dividend payments with $5.00 per share. If the dividends after year 5 are expected to stay at $5 per year forever and the cost of equity of this stock is 12%, what is the current stock price?
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