Question
Sales and profits of Growth Inc. are expected to grow at a rate of 25% per year for the next six years but the company
Sales and profits of Growth Inc. are expected to grow at a rate of 25% per year for the next six years but the company will pay no dividends and reinvest all earnings. After that, the dividends will grow at a constant annual rate of 7%. At the end of year 7, the company plans to pay its first dividend of $4.00 per share. If the required return is 16%, how much is the stock worth today?
| A. | $13.68 | |
| B. | $22.80 | |
| C. | $20.52 | |
| D. | $25.08 | |
| E. | $15.96 | |
| F. | $18.24 |
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Financial Management For Public Health And Not For Profit Organizations
Authors: Steven A. Finkler
4th International Edition
0132912813, 9780132912815
