Question
Petanq, Inc. is a successful provider of B2B cloud computing services. You expect next year's annual dividend per share to be $0.67. You believe that
Petanq, Inc. is a successful provider of B2B cloud computing services. You expect next year's annual dividend per share to be $0.67. You believe that the dividends will grow at a rate of 7% until the end of year 4, and that they will grow at a rate of 5% thereafter, until year 8. After year 8, you expect the dividends will grow at a rate of 2.5%, indefinitely. (To keep the problem simple, assume that firms can pay dividends in fractions of cents.) You estimate that the cost of capital appropriate for this dividend stream is 11.14%. What is the value of one share?
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