Yesteryear Productions pays no dividend at the present time. The company plans to start paying an annual

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Yesteryear Productions pays no dividend at the present time. The company plans to start paying an annual dividend in the amount of $0.40 a share for two years commencing four years from today. After that time, the company plans on paying a constant $0.75 a share annual dividend indefinitely. How much are you willing to pay to buy a share of this stock today if your required return is 11.6 percent?
A. $4.71
B. $3.78
C. $4.98
D. $4.22
E. $4.37
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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CFIN

ISBN: 978-1305666870

5th edition

Authors: Scott Besley, Eugene Brigham

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