Dividends at FSL are expected grow at a rate of negative 5.7% per year (the dividends...
Dividends at FSL are expected grow at a rate of negative 5.7% per year (the dividends are getting smaller). The stock just paid a dividend of $1.06 per share, and investors require a return of 13% to invest in the company. What is the expected price of the stock next year? Round your answer to 2 decimal places, for example $10.12.
Homework Answers
value = dividend next year/(Required return - growth rate)
=>
value = 1.06 * (1-0.057)^2/(0.13+0.057)
= 5.04
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Dividends at FSL are expected grow at a rate of negative 5.7%
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