Distant groves announced today that it will begin paying annual dividends next year. dividends for the first three years will be $.15, $.20, and $.25 a share, respectively. after that, dividends are projected to increase by 4 percent per year. what is one share of this stock worth today at a required return of 8.5 percent?
one share of this stock worth today is $5.77
Stock next annual dividend (in the 4th year) is $0.26 (= 0.25 x 1.04)
Value = Stock next annual dividend /(required return - dividend growth rate)
= 0.26/(8.5% -4%)
answergoing to the symphony;