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Estes Park Corp. pays a constant $1.43 dividend on its stock. The company will maintain this...

Estes Park Corp. pays a constant $1.43 dividend on its stock. The company will maintain this dividend for the next 11 years and will then cease paying dividends forever. If the required return on this stock is 9.59 percent, what is the current share price?

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Expert Solution

rate 9.5900%
Cash flows Year Discounted CF= cash flows/(1+rate)^year
                            -   0                                            -  
                        1.43 1                                        1.30
                        1.43 2                                        1.19
                        1.43 3                                        1.09
                        1.43 4                                        0.99
                        1.43 5                                        0.90
                        1.43 6                                        0.83
                        1.43 7                                        0.75
                        1.43 8                                        0.69
                        1.43 9                                        0.63
                        1.43 10                                        0.57
                        1.43 11                                        0.52

current share price = 9.47

jeff jeffy answered 2 months ago
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