Apocalyptica Corporation is expected to pay the following dividends over the nex

Question

Apocalyptica Corporation is expected to pay the following dividends over the next four years: $5.40, $16.40, $21.40, and $3.20. Afterwards, the company pledges to maintain a constant 6.00 percent growth rate in dividends, forever.

If the required return on the stock is 9 percent, what is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Current share price:

Apocalyptica Corporation is expected to pay the following dividends over the next four years: $5.40, $16.40, $21.40, and $3.20. Afterwards, the company pledges to maintain a constant 6.00 percent growth rate in dividends, forever.

If the required return on the stock is 9 percent, what is the current share price? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Current share price:

Explanation / Answer

PVF@9% Present value Dividend year 1 $                           5.40 0.917 $                4.95 Dividend year 2 $                        16.40 0.842 $              13.80 Dividend year 3 $                        21.40 0.772 $              16.52 Dividend year 4 $                           3.20 0.708 $                2.27 Dividend year 5 $                           3.39 Price in 4 years $                      113.07 0.708 $              80.10 ($3.39/(9%-6%) Stock price today $            117.65

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