Common stock​ value: Constant growthSeagate Technology is a global leader in data storage solutions and a​ high-yield dividend payer. From 2015 through 2019, Seagate paid the following​per-share dividends:YearDividend per share2019$2.512018$2.272017$1.832016$1.162015$1.49Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use a 19% required rate of return to find the value of​ Seagate's stock immediately after it paid its 2019 dividend of ​$2.51.

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Asked Sep 22, 2019
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Common stock​ value: Constant growth

Seagate Technology is a global leader in data storage solutions and a​ high-yield dividend payer. From 2015 through 2019, Seagate paid the following​per-share dividends:

Year Dividend per share
2019 $2.51
2018 $2.27
2017 $1.83
2016 $1.16
2015 $1.49

Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use a 19% required rate of return to find the value of​ Seagate's stock immediately after it paid its 2019 dividend of ​$2.51.

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Expert Answer

Step 1

D2015 = 1.49; D2019 = 2.51;

g = the future constant annual dividend growth rate = the historical annual growth rate of Seagate dividends = (D2019...

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