Question
Wireless Logic Corp (WLC) just paid a dividend of $1.25 per share. They have a new technology that is expected to go on the market
Wireless Logic Corp (WLC) just paid a dividend of $1.25 per share. They have a new technology that is expected to go on the market this year, and their dividend is expected to grow at 15% per year for the next three years. After that, the dividend is not expected to increase for the foreseeable future. The next dividend will be paid out exactly in one year. Assume investors require an 11% rate of return on WLCs stock.
What is the price of WLCs shares today right after the $1.25 dividend is paid? What is the price of WLCs shares in three years, right after it has paid the dividend (i.e., dont include the dividend in your calculation that you expect to receive in year three)?
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