Stamford Company's stock is trading at 21 dollars per share. The company's planned dividends are 2 dollars per share with a growth rate of 5%. Today, the company announced that it will increase its planned dividend from 2 dollars to 3 dollars per share. With the new dividend policy, the firm expects that its dividends will grow at a lower constant rate, which is 3% per year, indefinitely. Assuming that the required rate of return remains unchanged, what would be the value of a share of the firm after the announcement? a. 26.81 Ob. 32.45 c. 31.50 O d. 26.03

Stamford Company's stock is trading at 21 dollars per share. The company's planned dividends are 2 dollars per share with a growth rate of 5%. Today, the company announced that it will increase its planned dividend from 2 dollars to 3 dollars per share. With the new dividend policy, the firm expects that its dividends will grow at a lower constant rate, which is 3% per year, indefinitely. Assuming that the required rate of return remains unchanged, what would be the value of a share of the firm after the announcement? a. 26.81 Ob. 32.45 c. 31.50 O d. 26.03

Name: Stamford Company's stock is trading at 21 dollars per share. The comp
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Description: Stamford Company's stock is trading at 21 dollars per share. The company's planneddividends are 2 dollars per share with a growth rate of 5%. Today, the companyannounced that it will increase its planned dividend from 2 dollars to 3 dollars per shar

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 4P

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