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Question
The In-Tech Co. has just paid a dividend of $1 per share. The dividends are expected to grow at 25% per year for the next three years and at the rate of 5% per year thereafter. If the required rate of return on the stock is 18%(APR), what is the current value of the stock?
A. $12.97
B. $11.93
C. $15.20
D. None of the above
Answer
This answer is hidden. It contains 97 characters.
Related questions
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Suppose VS's stock price is currently $20. In the next six months it will either fall to $10 or rise to $30. What is the current value of a put option with an exercise price of $15? The six-month risk-free interest rate is 5% (periodic rate).
A. $5.00
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Q:
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B. Fall exactly by the amount of the dividend
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Generally, investors interpret the announcement of a decrease in dividends as:
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