Question

E connect. Charles Castaldo FİN 30 LA Sp 19: KL.FIN303A.SP19 help as Question S (of 20.00 points Bun Corp is growing quky Dividends ane expected to grow at a rate of 29 percent for the next thee years, with the growth aeing off to a constant 6.3 percent T the required reuis 15 percent and the company just paid a dividend of $2 90, what is the cument share price? (Hint Caloulate the est four dividends.) (De not round ntermedate caieinons and round your nwer to 2 decima. places, e g. 32163 얘 5

Answer 1

Just paid dividend, DO$2.90 Required return,RR-15% Growth rate, g-29% for next 3 years and thereafter 63% per year forever D1DO (1+g)-$2.90 *(1+ 29%- S3.741 D2- S3.741(1+29%)S4.82589 D3-$4.82589 (1+29% - $6.2253981 D4$6.2253981 * (16.3%$6.6175982 Terminal value of stock at the end ofyear 3 , P3 = D4 / RR-g) = $6.61 75982 / (15%-6.3%)-S76064347 Current price of stock, PO - Present value of dividends and terminal value of stock $3.741 * PVIE(1500 : 1) + S4.82589 * PVIF(15%. 2) + ($6.2253981+ $76.064347) * PVIF(15% : 3) - S3.741 0.8696S4.82589 0.7561 + S82.289745 0.6575 - S61.007536 - S61 Per share (Rounded) Ans : Current price of stock, PO -S61 Per share