Question
You believe that Walmart will pay a dividend of $200/share in a year, and you think that the firm will increase its annual dividend
You believe that Walmart will pay a dividend of $200/share in a year, and you think that the firm will increase its annual dividend payment by 1% forever. What is the PV of all the dividends/share that the firm will distribute if r = 6%? Hint: This is a growing perpetuity problem. Use the growing perpetuity formula: PV = C1/(r-g). Here C1 = 200 and g = 1%. Refer to pages 61 and 62 of the CH08b class notes if needed.
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