SAGE Ltd had earnings per share of $4 as of December 31, 2022, but paid no dividends Earnings were expected to grow at 15 1 percent per year for the following five years SAGE Ltd will start paying dividends for the first time on December 31, 2027, distributing 50 percent of its earnings to shareholders Earnings growth will be 5 percent per year for the next six years (that is, from January 1, 2028, through to December 31, 2033) Starting on December 31, 2033, SAGE Ltd will begin to pay out 80 percent of its earnings in dividends and earnings growth will stabilize at 2 percent per year in perpetuity The required rate of return on SAGE stock is 10 percent What should be the current share price of SAGE

Question

SAGE Ltd  had earnings per share of $4 as of December 31, 2022, but paid no dividends  Earnings were expected to grow at 15 1 percent per year for the following five years  SAGE Ltd  will start paying dividends for the first time on December 31, 2027, distributing 50 percent of its earnings to shareholders  Earnings growth will be 5 percent per year for the next six years (that is, from January 1, 2028, through to December 31, 2033)  Starting on December 31, 2033, SAGE Ltd  will begin to pay out 80 percent of its earnings in dividends and earnings growth will stabilize at 2 percent per year in perpetuity The required rate of return on SAGE stock is 10 percent  What should be the current share price of SAGE

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Question

SAGE Ltd. had earnings per share of $4 as of December 31, 2022, but paid no dividends. Earnings were expected to grow at 15.1 percent

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