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You own stock in McHam, Inc., a large fast-food restaurant chain. The company is will pay a dividend of $1.15 per share in the next
You own stock in McHam, Inc., a large fast-food restaurant chain. The company is will pay a dividend of $1.15 per share in the next year. In years 2 - 4, the dividend growth is expected to be 5% for each year. Years 5 and beyond, the company is expected to grow dividends 2%. If the cost of the equity capital is 4%, what is the stock price of the company? If you were offered this stock for $65, would you buy it?
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