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Polycorp has just paid a dividend of $5.00. It is expected to pay a dividend $6.00 at the end of the first year, $6.50 at
Polycorp has just paid a dividend of $5.00. It is expected to pay a dividend $6.00 at the end of the first year, $6.50 at the end of the second year, $7.00 at the end of the third year and $7.50 at the end of the fourth year. Dividends are then expected to grow at 10%pa for another six years, after which they are expected to grow at 4.00%pa forever. Shareholders required return on equity is 15.00% pa.What is the current price of Polycorp shares?
(In dollars and cents accurate to the nearest cent)
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