Question
TP Inc. is a young start-up company. No dividends will be paid on the stock over the next 7 years, because the firm needs to
TP Inc. is a young start-up company. No dividends will be paid on the stock over the next 7 years, because the firm needs to plow back its earnings to fuel growth. The company will then pay a $25 per share dividend at the end of year 8 and thereafter it will increase the dividends by 2% per year forever. If the required rate of return on this stock is 10%, what is the current (todays) share price?
Do not use the $ sign. Use commas to separate thousands. DO NOT USE decimals. Round to the nearest DOLLAR. For example if you obtain $1,432.728 then enter 1,433 or if you obtain $1,120.1321 then enter 1,120
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