Question
The company forecasts its dividends to be $1.20 per share next year, $1.80 per share in two years, and $2.50 per share in three years.
The company forecasts its dividends to be $1.20 per share next year, $1.80 per share in two years, and $2.50 per share in three years. After the third year, dividends are anticipated to grow at a constant sustainable rate of 4.0% per year. If the company's cost of capital is 14.0% and its applicable tax rate is 40.0% what is the estimated share price for the company's common equity?
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Contemporary Financial Management
Authors: R. Charles Moyer, William J. Kretlow, James R. Mcguigan
8th Edition
0324065914, 9780324065916
