Lohn Corporation is expected to pay the following dividends over the next four years: $17. $12....

Question

Question

Lohn Corporation is expected to pay the following dividends over the next four years: $17. $12. $8, and $4. Afterward, the co

Answer 1

Answer #1

Answer is $66.03

D1 = $17
D2 = $12
D3 = $8
D4 = $4

Constant growth rate, g = 4%

D5 = $4 * (1 + 0.04) = $4.16

Required return, rs = 12%

P4 = D5 / (rs - g)
P4 = $4.16 / (0.12 - 0.04)
P4 = $4.16 / 0.08
P4 = $52.00

P0 = $17/1.12 + $12/1.12^2 + $8/1.12^3 + $4/1.12^4 + $52/1.12^4
P0 = $66.03

So, current share price is $66.03

Add a comment

Answer 2

Similar Homework Help Questions

Lohn Corporation is expected to pay the following dividends over the next four years: $14, $10, $7, and $4. Afterward, t...

Lohn Corporation is expected to pay the following dividends over the next four years: $14, $10, $7, and $4. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever. If the required return on the stock is 14 percent, what is the current share price? Multiple Choice $63.27 $61.40 $68.82 $65.17 $60.11
Lohn Corporation is expected to pay the following dividends over the next four years: $9, $7,...

Lohn Corporation is expected to pay the following dividends over the next four years: $9, $7, $5, and $3. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 13 percent, what is the current share price?
Problem 8-17 Nonconstant Dividends [LO1] Lohn Corporation is expected to pay the following dividends over the next f...

Problem 8-17 Nonconstant Dividends [LO1] Lohn Corporation is expected to pay the following dividends over the next four years: $16, $12, $11, and $6.50. Afterward, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 16 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price $

Show me how to do this in the fastest way possible Lohn Corporation is expected to pay the following dividends over the...

Show me how to do this in the fastest way possible Lohn Corporation is expected to pay the following dividends over the next four years: $10, $8, $3, and $1. Afterward, the company pledges to maintain a constant 3 percent growth rate in dividends forever. If the required return on the stock is 8 percent, what is the current share price?
Far Side Corporation is expected to pay the following dividends over the next four years: $14....

Far Side Corporation is expected to pay the following dividends over the next four years: $14. $12. $7 and $4. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. Required: If the required return on the stock is 12 percent, what is the current share price? (Do not round your intermediate calculations.)
Synovec Corporation is expected to pay the following dividends over the next four years: $7, $13,...

Synovec Corporation is expected to pay the following dividends over the next four years: $7, $13, $18, and $3.25. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 10.4 percent, what is the current share price?

Urgent please Problem (25 points) Lohn Corporation is expected to pay the following dividends over the...

Urgent please Problem (25 points) Lohn Corporation is expected to pay the following dividends over the next four years: $11, 58, $550, and $245. Afterwards the company pledges to maintain a constant 4 percent growth rate in dividends forever If the required return on the stock is 11.5 percent, what is the current share price?
Far Side Corporation is expected to pay the following dividends over the next four years: $16,...

Far Side Corporation is expected to pay the following dividends over the next four years: $16, $12, $7, and $4. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. Required: If the required return on the stock is 10 percent, what is the current share price? (Do not round your intermediate calculations.) $87.60 $94.61 $85.34 $92.52 $89.83
Far Side Corporation is expected to pay the following dividends over the next four years: $13....

Far Side Corporation is expected to pay the following dividends over the next four years: $13. $9. $5, and $3. Afterward, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 12 percent, the current share price is $ 30.89. (Do not include the dollar sign ($). Round your answer to 2 decimal places. (e.g., 32.16))

Far Side Corporation is expected to pay the following dividends over the next four years: $13,...

Far Side Corporation is expected to pay the following dividends over the next four years: $13, $12, 59, and $5. Afterward, the company pledges to maintain a constant 7 percent growth rate in dividends forever. Required: If the required return on the stock is 14 percent, what is the current share price? (Do not round your Intermediate calculations.) $71.18 $79.37 $72.46 $74.92 $7717 O O