Question

In: Finance

Suppose you are a financial manager of a company and you want to determine the price...

Suppose you are a financial manager of a company and you want to determine the price of the
stock. The most recent annual (2019) dividend payment of the company, was $8 per share. You
expect that these dividends will grow at a 5% annual rate over the next five years. At the end of
the fifth year (i.e. the end of 2024) the dividend growth rate is expected to increase to 6.5% for
the foreseeable future. If the firm’s required return, r s , is 10%, then find out the price of the stock
today (i.e. at the end of 2019).

Solutions

Expert Solution

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Note :- Year 0 denotes year 2019 and similarly year 1 to 5 denotes year 2020 to 2024

jeff jeffy answered 1 year ago
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