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Today a stock does not pay dividends. You expect it to start paying dividends in two years from today, and you expect that the first
Today a stock does not pay dividends. You expect it to start paying dividends in two years from today, and you expect that the first annual dividend in two years from now will be $2 per share. From that point, you expect the growth rate of the dividend to be constant at 10% per year. The required return on the stock is 15%. What is the stock worth today? A) $34.78 B) $35 C) $36.36 D) $40 E) $44
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