Taylor Corp. is growing quickly. Dividends are expected to grow at a 30 percent

Question

Taylor Corp. is growing quickly. Dividends are expected to grow at a 30 percent rate for the next three years, with the growth rate falling off to a constant 6.5 percent thereafter.

If the required return is 13 percent and the company just paid a $3.00 dividend, what is the current share price? (Hint: Calculate the first four dividends.) (Do not include the dollar sign ($). Round your answer to 2 decimal places (e.g., 32.16).)

Taylor Corp. is growing quickly. Dividends are expected to grow at a 30 percent rate for the next three years, with the growth rate falling off to a constant 6.5 percent thereafter.

Taylor Corp. is growing quickly. Dividends are expected to grow at a 30 percent rate for the next three year, If the required return is 13 percent and the company just paid a $3.00 dividend, what is the current share price? Current share price $

Explanation / Answer

current share price = 3*1.3/1.13 + 3*1.3^2/1.13^2 + 3*1.3^3/1.13^3 +(3*1.3^3*1.065/(13%-6.5%))/1.13^3 =86.83   

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