Joven Novelty Products Inc. has decided that its dividend policy should reflect company growth. They...
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Joven Novelty Products Inc. has decided that its dividend policy should reflect company growth. They indicate that the first annual dividend they intend to pay will be $2.50 per share 3 years from today. Yearly dividends with then increase at a rate of 6% per year until the end of the 8th year from now and then grow at 3.5% per year therafter. What share price should you pay for such a stock if you expect an effective annual return of 15% per year? A) $28.12 B) $19.84 C) $17.96 D) None of the above
Joven Novelty Products Inc. has decided that its dividend policy should reflect company growth. They indicate that the first annual dividend they intend to pay will be $2.50 per share 3 years from today. Yearly dividends with then increase at a rate of 6% per year until the end of the 8th year from now and then grow at 3.5% per year therafter. What share price should you pay for such a stock if you expect an effective annual return of 15% per year?
A) $28.12
B) $19.84
C) $17.96
D) None of the above
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