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: $5.20, $16.20, $21.20, and $3.00. Afterwards, the company pledges to maintain a constant 5.50 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).)

Apocalyptica Corporation is expected to pay the following dividends over the next four years: $5.20, $16.20, $21.20, and $3.00. Afterwards, the company pledges to maintain a constant 5.50 percent growth rate in dividends, forever.

Explanation / Answer

Particulars Time PVF Amount PV Cash Inflows (Dividend)         1.00                0.9174                           5.20                           4.77 Cash Inflows (Dividend)         2.00                0.8417                         16.20                         13.64 Cash Inflows (Dividend)         3.00                0.7722                         21.20                         16.37 Cash Inflows (Dividend)         4.00                0.7084                           3.00                           2.13 Price at end of 4th year (d1/ke- g) = 3*1.055 / (9-5.5)         4.00                0.7084                         90.43                         64.06 Share Price                      100.96

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