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: $5.60, $16.60, $21.60, and $3.40. Afterwards, the company pledges to maintain a constant 5.25 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).)

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).)

Explanation / Answer

Current share price = 5.6/1.09 + 16.6/1.09^2 + 21.6/1.09^3 + 3.4/1.09^4 + (3.4*(1+5.25%)/(9%-5.25%))/(1.09)^4= 105.80

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