Accounting Assignment | Custom Assignment Help
September 13th, 2019
Suppose a stock will pay $11 per share dividend in one year’s time. The dividend is projected to grow at 8% the following year, and then 4% per year indefinitely after that. To clarify, dividend at beginning of year 1 (that is, one year from today) is: $11. Beginning of year 2 (2 years from today) is: $11 * 1.08. Beginning of year 3 (3 years from today) is: $11 * 1.08 * 1.04. and a 4% rate of growth every year after that. The required return is 6%. What is the stock’s price today?
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