In: Finance
Indigo Ink Supply paid a dividend of $4.5 last year on its common stock. It is expected that this dividend will grow at a rate of 7.5% for the next five years. After that, the company will settle into a slower growth pattern and plans to pay dividends that will grow at a rate of 3.4% per year. Investors require a return of 10.5% on the stock.
a. What will be the dividend paid out for the next six years? (Round your answers to 4 decimal places.)
b. What is the intrinsic value of Indigo’s stock? (Round your answer to 2 decimal places.)
Calculations-
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