Question
WorldwideInc.hasdecidedtoacquireanotherfirmby purchasingthefirm'soutstandingstock.Analysts forecastaperiodof2yearsofextraordinarygrowth(20 percent),followedby1yearofunusualgrowth..,followedby1yearofunusualgrowth(10 percent),andfinallyanormal(sustainable)growthrateof 6.5percentannuallyindefinitely.Thelastdividendwas D0=$1.00pershareandtherequiredreturnis8.6 percent.WhatisD4(i.e.,thedividendexpectedatendof period4)? 1.0000 1.286 1.584 1.687 1.440
WorldwideInc.hasdecidedtoacquireanotherfirmby purchasingthefirm'soutstandingstock.Analysts forecastaperiodof2yearsofextraordinarygrowth(20 percent),followedby1yearofunusualgrowth..,followedby1yearofunusualgrowth(10 percent),andfinallyanormal(sustainable)growthrateof 6.5percentannuallyindefinitely.Thelastdividendwas D0=$1.00pershareandtherequiredreturnis8.6 percent.WhatisD4(i.e.,thedividendexpectedatendof period4)?
1.0000
1.286
1.584
1.687
1.440
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Mathematics For Business
Authors: Stanley A Salzman, Charles D Miller, Gary Clendenen
8th Edition
