Business, 23.11.2019 02:31 FreyaLouise

Let’s look at a company that is currently not paying dividends. you predict that in five years the company will pay a dividend for the first time. the dividend will be $0.50 per share. you expect the dividend to grow at an 8% rate per year indefinitely at that time. the required return on companies like this one is 15%. what is the price of the stock today?
a. $5.39
b. $7.14
c. $4.08
d. $3.45
e. $1.75

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Let’s look at a company that is currently not paying dividends. you predict that in five years the c...