Find dividend?

4. Mobray Corp. is experiencing rapid growth. Dividends are expected to grow at 25 percent per year during the next 3 years, 15 percent over the following year, and the 6 percent per year indefinitely. The required return on this stock is 10 percent, and the stock currently sells for $79 per share. What is the projected dividend for the next year?

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  • 4 weeks ago

    Share price = Present value of cash flows

    If dividend next year is D

    79 = D/(1+10%)^1+D x (1+25%)^1/(1+10%)^2+D x (1+25%)^2/(1+10%)^3

    + D x (1+25%)^2 x (1+15%)/(1+10%)^4

    + D x (1+25%)^2 x (1+15%) x (1+6%)/(10%-6%) x 1/(1+10%)^4

    D =  2.143

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  • Anonymous
    4 weeks ago

    Homework Section >>>>>>>>>>>>

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