Calculating the Share Price of the Stock Given the Data
SPF company has just paid a dividend of $3.00 on its stock. The growth rate in dividends is expected to be a constant 7.7% per year, indefinitely. Investors require an 18% return on the stock for the first 3 years, a 12% return for the next 3 years and then a 13% return thereafter. What is the current share price for SPF stock?© SolutionLibrary Inc. solutionlibary.com 9836dcf9d7 https://solutionlibrary.com/business/finance/calculating-the-share-price-of-the-stock-given-the-data-27k
Note: to arrive at the PV, you need to take into account the discount factor from years 1-3 AND years 3-6. Finally, from year 7 onwards, the discount factor (return expected by the ...