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Deja Brew Coffee Manufacturing Corporation is expected to pay the following dividends over the next six...

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Finance

Deja Brew Coffee Manufacturing Corporation is expected to paythe following dividends over the next six years: $5, $13, $18, $11,$21 and $3.45. Afterward, the company pledges to maintain aconstant 7 percent growth rate in dividends, forever. If therequired return on the stock is 9% percent, what is the share pricein year 6, P6? What is the current share price, P0? Show all workand be descriptive please!

Answer & Explanation Solved by verified expert
3.7 Ratings (300 Votes)
Share price in year 6 P6 Dividend per share in Year 6 D6 345 per share Dividend Growth Rate after 6th year g 700 per year Required Rate of Return Ke 900 Therefore    See Answer
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Deja Brew Coffee Manufacturing Corporation is expected to paythe following dividends over the next six years: $5, $13, $18, $11,$21 and $3.45. Afterward, the company pledges to maintain aconstant 7 percent growth rate in dividends, forever. If therequired return on the stock is 9% percent, what is the share pricein year 6, P6? What is the current share price, P0? Show all workand be descriptive please!

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