A common stock has just payed a dividend of $2.32/share. The dividend is expected to grow...

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Finance

A common stock has just payed a dividend of $2.32/share. Thedividend is expected to grow by 16% for the coming 28 years. Afterthat, the growth rate in dividend is expected to be 4.28% per yearin perpetuity. The RRR on the stock is 12.82%. What is the value ofthe stock today?

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The Value of the stock today is the Present Value of Future Cash flows ie Present value of future dividend payments plus Present value of Stock price in year 28 Dividend in Year 28 D28 Dividend in Year 28 D28 D1 x 1 gn 232 x 1 01628 232 x 63800445 1480170 per share Price of the Stock in Year 28 P28 Price of the Stock in Year 28 P28 D281 g See Answer

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A common stock has just payed a dividend of $2.32/share. Thedividend is expected to grow by 16% for the coming 28 years. Afterthat, the growth rate in dividend is expected to be 4.28% per yearin perpetuity. The RRR on the stock is 12.82%. What is the value ofthe stock today?

A common stock has just payed a dividend of $2.32/share. The dividend is expected to grow...

80.2K

Verified Solution

Question

Finance

A common stock has just payed a dividend of $2.32/share. Thedividend is expected to grow by 16% for the coming 28 years. Afterthat, the growth rate in dividend is expected to be 4.28% per yearin perpetuity. The RRR on the stock is 12.82%. What is the value ofthe stock today?

Answer & Explanation Solved by verified expert

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