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Smashed Pumpkin Farms (SPF) just paid a dividend of GH4.50 on its stock. The growth rate in dividends is expected to be a constant 7.5
- Smashed Pumpkin Farms (SPF) just paid a dividend of GH4.50 on its stock. The growth rate in dividends is expected to be a constant 7.5 percent per year, indefinitely. Investors require a 20 percent return on the stock for the first three years, an 11 percent return for the next three years, and then a 12 percent return, thereafter. What is the current share price for SPF stock?
- Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next five years because the firm needs to plough back its earnings to fuel growth. The company will pay a GH6 per share dividend in six years and will increase the dividend by 5 percent per year, thereafter. If the required return on this stock is 21 percent, what is the current share price?
- South Park Corporation is expected to pay the following dividends over the next four years: GH4.75, GH3, GH2, and GH1. Afterwards, the company pledges to maintain a constant 9 percent growth rate in dividends, forever. If the required return on the stock is 16 percent, what is the current share price?
- Mega Growth Co. is growing quickly. Dividends are expected to grow at a 30 percent rate for the next three years, with the growth rate falling off to a constant 7 percent, thereafter. If the
the required return is 21 percent and the company just paid a GH1.50 dividend, what is the current share price?
- Janicek Corp. is experiencing rapid growth. Dividends are expected to grow at 20 percent per year during the next three years, 15 percent over the following year, and then 10 percent per year, indefinitely. The required return on this stock is 15 percent, and the stock currently sells for GH50.00 per share. What is the projected dividend for the coming year?
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