Finance
posted by Teresa
Company Q has just paid a dividend of $1.40 per share. Its dividend is expected to grow at 5% per year perpetually. If the required return is 10%, what is the value of a share in company Q?

economyst
The formula is:
P0 = sum( (DPS*(1+g)^t) / (1+r)^t)
where g is expected growth (.05), r is the required rate of return (.1), and t goes from 1 to infinity.
Unfortunately, my math skills have long since faded away; I am not confident in my ability to do infinite series.
But I cheated and used an excel spreadsheet. if t goes from 1 to inf, I get P0=29.4.
Respond to this Question
Similar Questions

Finance
Company Q has just paid a dividend of $1.40 per share. Its dividend is expected to grow at 5% per year perpetually. If the required return is 10%, what is the value of a share in company Q? 
Finance
Company Q has just paid a dividend of $1.40 per share. Its dividend is expected to grow at 5% per year perpetually. If the required return is 10%, what is the value of a share in Company Q? 
Finance questions
1) growth rates The stock price of the company is $76 investors require a 14% rate of return on similar stocks If the company plans to pay a dividend of $5.00 next year the expected growth rate of the company's stock price is ______ … 
Finance. PLEASE HELP ME
1) growth rates The stock price of the company is $76 investors require a 14% rate of return on similar stocks If the company plans to pay a dividend of $5.00 next year the expected growth rate of the company's stock price is ______ … 
Finance
Kilsheimer Company just paid a dividend of $ 4 per share. Future dividends are expected to grow at a constant rate of 6% per year. What is the value of the stock if the required return is 12 %? 
business finance
Hot Wings, Inc., has an odd dividend policy. The company has just paid a dividend of $11.25 per share and has announced that it will increase the dividend by $9.25 per share for each of the next four years, and then never pay another … 
Principles of Finance
Kilsheimer Company just paid a dividend of $ 4 per share. Future dividends are expected to grow at a constant rate of 6% per year. What is the value of the stock if the required return is 12 %? 
Finance
The Isberg Company just paid a dividend of $0.75 per share, and that dividend is expected to grow at a constant rate of 5.50% per year in the future. The company's beta is 1.25, the market risk premium is 5.00%, and the riskfree rate … 
Finance
Hetfield and Ulrich, Inc., has an odd dividend policy. The company has just paid a dividend of $7 per share and has announced that it will increase the dividend by $5 per share for each of the next 4 years, and then never pay another … 
finance
3.The Lo Company earned $2.60 per share and paid a dividend of $1.30 per share in the year that just ended. Earning and dividend per share are expected to grow at a rate of 5% per year in the future. Determine the value of the stock: