ABC Inc.’s first dividend of $2.60 per share is expected to be paid six years from...

ABC Inc.’s first dividend of $2.60 per share is expected to be paid six years from today. From then on, dividends will grow by 10 percent per year for five years. After five years, the growth rate will slow to 5 percent per year in perpetuity. Assume that ABC's required rate of return is 13 percent. What is the price of a share of ABC Inc. today?

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jeff jeffy answered 2 years ago

Marigold Mechanical Inc.’s first dividend of $1.40 per share is expected to be paid six years...

Marigold Mechanical Inc.’s first dividend of $1.40 per share is expected to be paid six years from today. From then on, dividends will grow by 10 percent per year for five years. After five years, the growth rate will slow to 5 percent per year in perpetuity. Assume that Marigold’s required rate of return is 16 percent. What is the price of a share of Marigold Mechanical today? (Round present value factor calculations to 5 decimal places, e.g. 1.15612. Round...

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