Please show your work A company just paid a dividend of $6 and expects the dividend...

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Finance

Please show your work
A company just paid a dividend of $6 and expects the dividend todecrease 10% this year, decrease 20% next year and then grow at aconstant rate of 5% thereafter. If your required rate of return forthe company is 10%, what is the per share value today?
A.$74.50 B.$76.25 C. $78.22 D.$80.14 E. $83.45

Answer & Explanation Solved by verified expert

4.2 Ratings (899 Votes)

Step1 Dividend for the next 2 years Dividend in Year 0 D0 600 per share Dividend in Year 1 D1 540 per share 600 per share x 90 Dividend in Year 2 D2 432 per share 540 per share x 80 See Answer

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Please show your workA company just paid a dividend of $6 and expects the dividend todecrease 10% this year, decrease 20% next year and then grow at aconstant rate of 5% thereafter. If your required rate of return forthe company is 10%, what is the per share value today? A.$74.50 B.$76.25 C. $78.22 D.$80.14 E. $83.45