Lawrence Industries%u2019 most recent annual dividend was $1.80 per share (D0 =
ID: 2699902 • Letter: L
Question
Lawrence Industries%u2019 most recent annual dividend was $1.80 per share (D0 = $1.80), and the firm%u2019s required return is 11%. Find the market value of Lawrence%u2019s shares when:
a. Dividends are expected to grow at 8% annually for 3 years, followed by a 5% constant annual growth rate in years 4 to infinity.
b. Dividends are expected to grow at 8% annually for 3 years, followed by a 0% constant annual growth rate in years 4 to infinity.
c. Dividends are expected to grow at 8% annually for 3 years, followed by a 10% constant annual growth rate in years 4 to infinity.
Explanation / Answer
a) MV = 34.1275 b) MV = 23.7282 c) MV = 179.199
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