A company recently paid a dividend of $1.20 per share. It is estimated that the company's...

90.2K

Verified Solution

Question

Finance

A company recently paid a dividend of $1.20 per share. It isestimated that the company's dividend will grow at the rate of 15%per year for the next 5 years, then at a constant rate of 7% a yearthereafter. The required return on this company is 8.80%. What isthe estimated stock price today?

Answer & Explanation Solved by verified expert

4.2 Ratings (679 Votes)

As per dividend discount model current price of stock is the present value of future dividends Step1Calculate present value of dividend of next 5 years Year See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

A company recently paid a dividend of $1.20 per share. It isestimated that the company's dividend will grow at the rate of 15%per year for the next 5 years, then at a constant rate of 7% a yearthereafter. The required return on this company is 8.80%. What isthe estimated stock price today?

A company recently paid a dividend of $1.20 per share. It is estimated that the company's...

90.2K

Verified Solution

Question

Finance

A company recently paid a dividend of $1.20 per share. It isestimated that the company's dividend will grow at the rate of 15%per year for the next 5 years, then at a constant rate of 7% a yearthereafter. The required return on this company is 8.80%. What isthe estimated stock price today?

Answer & Explanation Solved by verified expert

Get Answers to Unlimited Questions

Membership Benefits:

Transcribed Image Text

Other questions asked by students