Over the past 10 years, the dividends of Party Time Inc. have grown at an...
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Over the past 10 years, the dividends of Party Time Inc. have grown at an annual rate of 16 percent. The current (D0) dividend is $3.9 per share. This dividend is expected to grow to $4.4 next year, then grow at an annual rate of 13 percent for the following 2 years and 6 percent per year thereafter. You require a 16 percent rate of return on this stock. Use Table II to answer the questions. Do not round intermediate calculations. Round your answers to the nearest cent.
- What would you be willing to pay for a share of Party Time stock today? $ ______________
- What price would you anticipate the stock selling for at the beginning of year 3? $ _______________
- If you anticipated selling the stock at the end of 2 years, how much would you pay for it today? $ _______________
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