Question
Triangular Co. will pay a dividend of $3.25 per share, today. The company will continue to pay dividends on a yearly basis, and increase its
Triangular Co. will pay a dividend of $3.25 per share, today. The company will continue to pay dividends on a yearly basis, and increase its dividend by 12 percent per year for the next 5 years. After that, the expected dividend growth rate will be negative 3 percent per year forever. If the required return on Triangular stock is 8 percent, and a stocks share price is equal to the PV of all remaining dividend payments, what will a share of Triangular Co. sell for immediately before the dividend is paid? What will the price of the stock be right after the dividend is paid?
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