East Side Corporation is expected to pay the following dividends over the next four years: $16,...

East Side Corporation is expected to pay the following dividends over the next four years: $16, $12, $11, and $6.50. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 12 percent, what is the current share price?

Expert Solution

	12.00%
Cash flows	Year	Discounted CF
-	0	0.00
16.00	1	14.29
12.00	2	9.57
11.00	3	7.83
6.50	4	4.13
97.50	4	61.96

Current price = 97.78

jeff jeffy answered 3 months ago

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