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Suppose today's date is March 30,2010 and the stock of U-Pay Inc., pays a dividend every year on March 29. The most recent dividend was
Suppose today's date is March 30,2010 and the stock of U-Pay Inc., pays a dividend every year on March 29. The most recent dividend was $1.50 per share. You expect the company's dividends to increase at a rate of 25% per year through March 29, 2013. After that, dividends will probably increase at 5% per year. Investors require a 14% return on U-Pay stock. Calculate the price of the stock on the following dates: March 30, 2010; September 30, 2011; and March 30, 2014.
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