Question
You are considering purchasing shares of a publicly traded company. The most recent dividend paid by the company was $6.62. The appropriate equity cost of
You are considering purchasing shares of a publicly traded company. The most recent dividend paid by the company was $6.62. The appropriate equity cost of capital for the company is 7.9%. The company is experiencing growth, and the expected growth rates for the next 4 years are listed below. After this period of increasing growth passes, the company expects growth to stabilize at a long run growth rate of 3.0%.
Year 1 = 1.5% Growth Rate
Year 2 = 3.0% Growth Rate
Year 3 = 4.5% Growth Rate
Year 4 = 6% Growth Rate
What are the dividends necessary? (5 dividends) How to find these dividends is needed.
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