Question
Outback Corporation paid a dividend of $2 per share over the last 12 months. The dividend is expected to grow at a rate of 30
Outback Corporation paid a dividend of $2 per share over the last 12 months. The dividend is expected to grow at a rate of 30 percent over the next three years (supernormal growth). It will then grow at a normal, constant rate of 5 percent for the foreseeable future. The required rate of return is 10 percent (this will also serve as the discount rate). What is the current value of the stock? (This answer represents the present value of the first three periods of dividends from a previous question plus the present value of the price of the stock after three periods.)
Select one:
a. $77.69
b. $52.36
c. $63.54
d. $75.81
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