Question
Ted McKay has just bought the common stock of Cullumber Corp. Management of Cullumber expects the company expects to grow at the following rates for
Ted McKay has just bought the common stock of Cullumber Corp. Management of Cullumber expects the company expects to grow at the following rates for the next three years: 35 percent, 30 percent, and 20 percent. Last year the company paid a dividend of $2.60. Assume a required rate of return of 10 percent. A.) Compute the expected dividend for the first year. (Round answer to 2 decimal places, e.g. 15.25) B.) Compute the expected dividend for the second year. (Round answer to 2 decimal places, e.g. 15.25.) C.) Compute the expected dividend for the third year. (Round answer to 2 decimal places, e.g. 15.25.) D.) Compute the present value of these dividends if the required rate of return is 10 percent. (Round answer to 2 decimal places, e.g. 15.25.)
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