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MCC is growing rapidly and it currently retains all of its earnings (no dividends). If is expected that MCC will begin paying a $1.00 dividend
MCC is growing rapidly and it currently retains all of its earnings (no dividends). If is expected that MCC will begin paying a $1.00 dividend in year 3. The year 4 dividend will grow by 50% and the year 5 dividend will also increase by 50%. Thereafter (year 6 and beyond), dividend growth is expected to be a constant 8% per year. If your required return for MCC is 15%, what are you willing to pay?
The answer is 19.89 but please show me the procedure of how to do it.
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