Omega Foods currently pays a dividend of $1.90. The growth rate, which is currently 20%, is expected no decline linearly over the next 10 years to a stable rate of 5% thereafter. The required return is 7.5%. Calculate the current value of Omega.

Omega Foods currently pays a dividend of $1.90. The growth rate, which is currently 20%, is expected no decline linearly over the next 10 years to a stable rate of 5% thereafter. The required return is 7.5%. Calculate the current value of Omega.

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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Question

H-model
Omega Foods currently pays a dividend of $1.90. The growth rate, which is currently 20%, is expected no decline
linearly over the next 10 years to a stable rate of 5% thereafter. The required return is 7.5%. Calculate the current
value of Omega.
$ Number
Round your answer to the nearest cent

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