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Thirsty Cactus Corp. just paid a dividend of $1.35 per share. The dividends are expected to...

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Finance

Thirsty Cactus Corp. just paid a dividend of $1.35 per share.The dividends are expected to grow at 30 percent for the next 9years and then level off to a 7 percent growth rate indefinitely.If the required return is 12 percent, what is the price of thestock today?

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4.2 Ratings (622 Votes)
Step 1 Computation of market price at the end of year 9using Gordon Growth MdelP9 D10 Ke gWhereP9 Share price at year    See Answer
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Thirsty Cactus Corp. just paid a dividend of $1.35 per share.The dividends are expected to grow at 30 percent for the next 9years and then level off to a 7 percent growth rate indefinitely.If the required return is 12 percent, what is the price of thestock today?

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