Next period\'s expected DPS: $2.59 Temporary growth rate: 3.2% Periodic expected

ID: 2696258 • Letter: N

Question

Next period's expected DPS: $2.59
Temporary growth rate: 3.2%
Periodic expected or required return: 11.2%

Given the information above, if this company expects its dividends to grow for 4 periods at 3.2% and then stop forever, what should this company's current price be? (Round to the nearest cent.) Answer is 8.36. I need the formula and specific placement of numbers Given the information above, if this company expects its dividends to grow for 4 periods at 3.2% and then stop forever, what should this company's current price be? (Round to the nearest cent.) Answer is 8.36. I need the formula and specific placement of numbers

Explanation / Answer

Hi,

Please find the answer as follows:

Present Value = 2.59*(1+.032)/(1+.112)^1 + 2.59*(1+.032)/(1+.112)^2 + 2.59*(1+.032)/(1+.112)^3 + 2.59*(1+.032)/(1+.112)^4 = 8.26

I am not sure why a difference of .10 is coming. It can be because of approximations. Please check and rate accordingly.

Thanks.

Navigate

Next let\'s practice finding profit maximization points for several different pr

Next quarter in statistical mechanics you will learn that for a system in therma

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

Next period\'s expected DPS: $2.59 Temporary growth rate: 3.2% Periodic expected

Question

Explanation / Answer

Related Questions

Navigate