A company is expecting a period of intense growth and has decided to retain more of...

A company is expecting a period of intense growth and has decided to retain more of their earnings to help finance that growth. As a result, the company is going to reduce the annual dividend by 13.25% a year for the next three years. After those three years, the company will maintain a constant dividend of $0.75 a share. Recently, the company paid $1.55 as the annual dividend per share. What is the market value of this stock if the required rate of return is 10.25%?
options: $7.76
$7.97
$8.18
$8.39
$8.60

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Expert Solution

Ans is $8.39

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jeff jeffy answered 1 year ago

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