Lohn Corporation is expected to pay the following dividends over the next four years: $7.48, $3.6,...

Lohn Corporation is expected to pay the following dividends over the next four years: $7.48, $3.6, $6.1, and $6.07. Afterward, the company pledges to maintain a constant 4.95 percent growth rate in dividends forever. If the required return on the stock is 7.06 percent, what is the current share price?

Expert Solution

rate	7.0600%
Cash flows	Year	Discounted CF= cash flows/(1+rate)^year
-	0	-
7.48	1	6.99
3.60	2	3.14
6.10	3	4.97
6.07	4	4.62
301.92	4	229.82

terminal value = 6.07*1.0495/(0.0706-0.0495) = 301.92

price of the share price = 249.53

jeff jeffy answered 3 years ago

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