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Corp. forecasts its dividends to be $2.25 per share next year, $2.75 per share in two...

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Finance

Corp. forecasts its dividends to be $2.25 per share next year,$2.75 per share in two years, and $3.60 per share in three years.After the third year, dividends are anticipated to grow at aconstant sustainable rate of 5.0% per year. If cost of capital is16.0% and its applicable rate is 35.0%, what is the estimated shareprice for the company's common equity? YOU MUST USE ATLEAST 4 DECIMIL PLACES IN ALL CALCULATIONS AND SHOW ALL WORK TORECEIVE CREDIT.

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3.7 Ratings (638 Votes)
Step1 Dividend for the next 3 years Dividend per share in Year 1 D1 225 per share Dividend per share in Year 2 D2 275 per share Dividend per share in Year 3 D3 360 per share Step2 Share Price in    See Answer
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Corp. forecasts its dividends to be $2.25 per share next year,$2.75 per share in two years, and $3.60 per share in three years.After the third year, dividends are anticipated to grow at aconstant sustainable rate of 5.0% per year. If cost of capital is16.0% and its applicable rate is 35.0%, what is the estimated shareprice for the company's common equity? YOU MUST USE ATLEAST 4 DECIMIL PLACES IN ALL CALCULATIONS AND SHOW ALL WORK TORECEIVE CREDIT.

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