Maloney, Inc., has an odd dividend policy. The company has just paid a dividend

Question

Maloney, Inc., has an odd dividend policy. The company has just paid a dividend of $3 per share and has announced that it will increase the dividend by $5 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

Maloney, Inc., has an odd dividend policy. The company has just paid a dividend of $3 per share and has announced that it will increase the dividend by $5 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

Explanation / Answer

Hi,

Please find the answer as follows:

Current Price = 8/(1+.11)^1 + 13/(1+.11)^2 + 18/(1+.11)^3 + 23/(1+.11)^4 + 28/(1+.11)^5 = 62.69

Answer is 62.69

Thanks.

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