Problem 17-7 Spreadsheet Problem: Dividends Set Annually (LG17-4) Suppose that a firm always announces a yearly dividend at the end of the first quarter of the year, but then pays the dividend out as four equal quarterly payments. If the next such "annual" dividend has been announced as $5.20, it is exactly one quarter until the first quarterly dividend from that $5.20, the effective annual required rate of return on the company's stock is 13 percent, and all future "annual" dividends are expected to grow at 3 percent per year indefinitely, how much will this stock be worth? Note: Do not round intermediate calculations and round your final answer to 2 decimal places. Stock's worth
Dividend Policy
A dividend is a part of the profit paid to the shareholder in an organization. The management of the organization has the right to decide the policy for giving a dividend from the earnings to the shareholder. However, an organization is not in the obligation to declare a dividend for the investor. Dividend policy differs from organization to organization. As the management has the only authority to decide dividend rate, dividend amount, and time of dividend payout by considering all other elements that create an impact on the payment of a dividend.
Stocks And Dividends
Stock or equities are generally sold and bought in the Stock Exchange or which is popularly known as the stock market. Stocks are issued in the Stock Exchange for the sole purpose of raising funds for the Corporation or the company itself. Now since an individual has purchased a portion of the Corporation or company, he or she may claim to be a part of the earnings or profit of the company.
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