A stock is expected to pay its first annual dividend in 3 years. The dividend is expected to stay constant at $1.7 per year for 22 years and then grow at 5% annually forever. The required rate of return is 12%. (hint: non-standard dividends; two-stage of dividends) What is the PV today of the first-stage dividends? (22 years of constant $1.7 dividend per year is the first stage)

A stock is expected to pay its first annual dividend in 3 years. The dividend is expected to stay constant at $1.7 per year for 22 years and then grow at 5% annually forever. The required rate of return is 12%. (hint: non-standard dividends; two-stage of dividends) What is the PV today of the first-stage dividends? (22 years of constant $1.7 dividend per year is the first stage)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 13P

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