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Please show your work A company just paid a dividend of $6 and expects the dividend...

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Finance

Please show your work

A company just paid a dividend of $6 and expects the dividend todecrease 10% this year, decrease 20% next year and then grow at aconstant rate of 5% thereafter. If your required rate of return forthe company is 10%, what is the per share value today?

         A.$74.50                  B.$76.25                       C.  $78.22                       D.$80.14                   E. $83.45

Answer & Explanation Solved by verified expert
4.2 Ratings (899 Votes)
Step1 Dividend for the next 2 years Dividend in Year 0 D0 600 per share Dividend in Year 1 D1 540 per share 600 per share x 90 Dividend in Year 2 D2 432 per share 540 per share x 80    See Answer
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Transcribed Image Text

Please show your workA company just paid a dividend of $6 and expects the dividend todecrease 10% this year, decrease 20% next year and then grow at aconstant rate of 5% thereafter. If your required rate of return forthe company is 10%, what is the per share value today?         A.$74.50                  B.$76.25                       C.  $78.22                       D.$80.14                   E. $83.45

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