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Q 5. Falcon is considering a new product line. The current stock price without the new line is $25.75. a) With the new line, Falcon
Q 5. Falcon is considering a new product line. The current stock price without the new line is $25.75. a) With the new line, Falcon expects to drop the dividend to $.90 per share for the next 3 years. After year 3, dividends will start to grow at 3% in perpetuity. The required return is 7%. Find the price with the new line. b) Based only on price per share, should they develop the new line? Explain. For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac)
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