February 19, 2017

Homework Help: Business Finance

Posted by Naomi on Wednesday, December 19, 2012 at 4:04am.

A corporation will pay an annual dividend of $0.65 one year from now. Analyst expects this dividend to grown 12.9% per year thereafter until the fifth year. After then, growth will level off at 1.9% per year. According to the dividend discount model what is the value of the share if the firm’s equity cost of capital is 8.1%

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