East Side Corporation is expected to pay the following dividends over the next four years: $16,...
Free
90.2K
Verified Solution
Link Copied!
Question
Finance
East Side Corporation is expected to pay the following dividendsover the next four years: $16, $12, $11, and $6.50. Afterward, thecompany pledges to maintain a constant 5 percent growth rate individends forever. If the required return on the stock is 12percent, what is the current share price?
East Side Corporation is expected to pay the following dividendsover the next four years: $16, $12, $11, and $6.50. Afterward, thecompany pledges to maintain a constant 5 percent growth rate individends forever. If the required return on the stock is 12percent, what is the current share price?
Answer & Explanation Solved by verified expert
4.0 Ratings (701 Votes)
| 12.00% | ||
| Cash flows | Year | Discounted CF |
| Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â -Â Â | 0 | 0.00 |
| Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 16.00 | 1 | 14.29 |
| Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 12.00 | 2 | 9.57 |
| Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 11.00 | 3 | 7.83 |
| Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 6.50 | 4 | 4.13 |
| Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 97.50 | 4 | 61.96 |
Current price = 97.78
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!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Best
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.