General Importers announced that it will pay a dividend of $3.75 per share one year from...
Homework Answers
HI
Price of stock will be equal to present value of all future dividends.
Here D1 = $3.75
D8 = $1.85
hence price of stock after 7 year from today = D8/r
= 1.85/11.6%
= $15.9483
Current Price of stock = 15.9483/(1+11.6%)^7 + 3.75/(1+11.6%)
= 7.397 + 3.360
= $10.76
Thanks
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