contestada

Maurer, Inc., has an odd dividend policy. The company has just paid a dividend of $2.75 per share and has announced that it will increase the dividend by $4.50 per share for each of the next five years and then never pay another dividend. If you require a return of 11 percent on the company’s stock, how much will you pay for a share today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Respuesta :

Answer:

$56.60(Approx)

Explanation:

The calculation of current price share is shown below:-

For 1 year Dividend

= $2.75 + $4.5

= $7.25

For 2 year Dividend

$7.25 + $4.5

= $11.75

For 3 year Dividend

= $11.75 + $4.5

= $16.25

For 4 year Dividend

$16.25 + $4.5

=$20.75

For 5 year Dividend

$20.75 + $4.5

= $25.25

Current share price = Future dividends × Present value of discounting factor

(11%,time period)

= $7.25 ÷ 1.11 + $11.75 ÷ 1.11^2 + $16.25 ÷ 1.11^3 + $20.75 ÷ 1.11^4 + $25.25 ÷ 1.11^5

=$56.60(Approx)

Otras preguntas