Posted by Samy on Friday, July 30, 2010 at 5:31pm.
Thirsty Cactus Corp. just paid a dividend of $1.25 per share. The dividends are expected to grow at 28 percent for the next eight years and then level off to a 6 percent growth rate indefinitely. If the required return is 13 percent, what is the price of the stock today? (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))

Finance  Ms. Sue, Friday, July 30, 2010 at 5:34pm
Christina, Erika, Rusty, Delaney, Samy  several similar questions from the same person  without any attempt at posting what you don't understand  is a big turnoff for Jiskha tutors. We expect students to make an effort be and be explicit about what they don't understand.
In addition, we have no regular volunteer tutors whose expertise is finance.

Finance  Alejandro, Tuesday, January 13, 2015 at 10:00pm
1) N=8 / I%=28 / PV=1.25 therefore FV = 9.008
2) 9.008 x 1.06 = 9.54848
3) 9.54848 / (.13.06) = 136.41
4) N=8 / I%=13 / FV= 136.41 therefore PV = 51.31

Finance  Alejandro, Thursday, January 15, 2015 at 1:48am
5) PV of Growing Annuity (From t=0 to infinity) = 18.25
6) 51.31 + 18.25 = 69.56
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