A common stock is expected to pay no dividends during the next four quarters but...
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Finance
A common stock is expected to pay no dividends during the next four quarters but at the end of 5th quarter, it is expected to pay dividend per share of $1.5 and thereafter dividends are expected to be paid quarterly and into indefinite future. The quarterly growth rate of dividends stream is 1.0% and it is expected to stay the same into indefinite future. The required expected rate of return on the common stock is 12% per annum, and it is expected to stay the same. Find:
(i) The current price per share of the stock.
(ii) The expected price per share at the beginning of the 6th quarter.
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