A company just paid a dividend of $4 per share. The dividends are expected to grow at a constant rate of 5% per year indefinitely. If the investors require a return of 9% on the company's share, what is the current price of the share? What will the price be in three years?
A company just paid a dividend of $4 per share. The dividends are expected to grow at a constant rate of 5% per year indefinitely. If the investors require a return of 9% on the company's share, what is the current price of the share? What will the price be in three years?
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 12P
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A company just paid a dividend of $4 per share. The dividends are expected to grow at a constant rate of 5% per year indefinitely. If the investors require a return of 9% on the company's share, what is the current price of the share? What will the price be in three years?
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