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Fey Fashions expects the following dividend pattern over the next seven​ years: Year 1 Year 2...

Fey Fashions expects the following dividend pattern over the next seven​ years:

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

​$1.00

​$1.10

​$1.21

​$1.33

​$1.46

​$1.61

​$1.77

The company will then have a constant dividend of ​$2.00 forever. What is the​ stock's price today if an investor wants to earn

a. 17​%? $_______ (Round to the nearest​ cent.)

b. 22​%? $_______ (Round to the nearest​ cent.)

Solutions

Expert Solution

we have to calculate here present value of all dividends and present value of P7. so we will get P0

jeff jeffy answered 1 year ago
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