Far Side Corporation is expected to pay the following dividends over the next fo

Question

Far Side Corporation is expected to pay the following dividends over the next four years: $11, $9, $6, and $2. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever.

  

If the required return on the stock is 14 percent, what is the current share price? (Do not round your intermediate calculations.)

A) $47.69

B) $37.91

C) $39.91

D) $41.11

E) $39.22

Far Side Corporation is expected to pay the following dividends over the next four years: $11, $9, $6, and $2. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever.

Explanation / Answer

so option c is correct.

year D PV 1 11 9.649123 2 9 6.925208 3 6 4.049829 4 2 1.184161 21.80832 P4= 2*1.07/(0.14-0.07) ie =30.57 Po = 30.57/1.14^4 18.09989 total pV = 21.81+18.099 39.90821

so option c is correct.

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.