Question
Widget Manufacturers Inc. has just paid a dividend of $3 per share. Dividends are expected to grow at 10.00% per year for the next 2
Widget Manufacturers Inc. has just paid a dividend of $3 per share. Dividends are expected to grow at 10.00% per year for the next 2 years, 6.00% the third year, and 3.00% each year thereafter. Widget's stock's beta is 0.90, while the risk-free rate is 3.20% per year and the market risk premium is 6.00% per year.
Based on this information, calculate the price per share of Widget's stock.
Step by Step Solution
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There are 3 Steps involved in it
Step: 1
To calculate the price per share of Widgets stock we can use the dividend discount model ...
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Financial Reporting Financial Statement Analysis and Valuation
Authors: Clyde P. Stickney
6th edition
324302959, 978-0324302967, 324302967, 978-0324302950
