Question
Please show work. A) Key Corporation, is a start-up tech. firm. No dividends will be paid on the stock over the next five years, because
Please show work.
A) Key Corporation, is a start-up tech. firm. No dividends will be paid on the stock over the next five years, because the firm needs the money for growth. The company will then pay a $6 per share dividend and will increase the dividend by 5 percent per year thereafter. If the required return on this stock is 23 percent, what is the current share price?
B) Taza Corporation is expected to pay the following dividends over the next four years: $4.75, $3, $2, $1. Afterwards, the company pledges to maintain a constant 9 percent growth rate in dividends, forever. If the required return on the stock is 17 percent, what is the current share price?
C) Torsion Corporation stock currently sells for $108 per share. The market requires a 15 percent return on the firms stock. If the company maintains a constant 7 percent growth rate in dividends, what was the most recent dividend per share paid on the stock?
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