Question
This year, Shoreline Light and Gas (SL&G) paid its stockholders an annual dividend of $3 a share. A major broker age firm recently put out
This year, Shoreline Light and Gas (SL&G) paid its stockholders an annual dividend of $3 a share. A major broker age firm recently put out a report on SL&G predicting that the companys annual dividends would grow at the rate of 10% per year for each of the next five years and then level off and grow at 6% there after. a. Use the variable-growth DVM and a required rate of return of 12% to find the maximum price you should be willing to pay for this stock. b. Redo the SL&G problem in part a, this time assuming that after year 5, dividends stop growing al together (for year 6 and beyond, g = 0). Compare your answers. Ps: Do NOT use the excel
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