CX Enterprises has the following expected dividends: $1.11 in one year, $1.19 in two years, and $1.28 in three years. After that, its dividends are expected to grow at 3.9% per year forever (so thatyear four's dividend will be 3.9% more than $1.28 and so on). If CX's equity cost of capital is 12.3%, what is the current price of its stock?The price of the stock will be $. (Round to the nearest cent.)

Here we will use the dividend discount model. As per the dividend discount model the price of stock…

CX Enterprises has the following expected dividends: $1.11 in one year, $1.19 in two years, and $1.28 in three years. After that, its dividends are expected to grow at 3.9% per year forever (so th year four's dividend will be 3.9% more than $1.28 and so on). If CX's equity cost of capital is 12.3%, what is the current price of its stock?

CX Enterprises has the following expected dividends: $1.11 in one year, $1.19 in two years, and $1.28 in three years. After that, its dividends are expected to grow at 3.9% per year forever (so th year four's dividend will be 3.9% more than $1.28 and so on). If CX's equity cost of capital is 12.3%, what is the current price of its stock?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 12P

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