Exercise Bicycle Company is expected to pay a dividend in year 1 of $1.20, a dividend...
Exercise Bicycle Company is expected to pay a dividend in year 1 of $1.20, a dividend in year 2 of $1.50, and a dividend in year 3 of $2.00. After year 3, dividends are expected to grow at the rate of 10% per year. An appropriate required return for the stock is 14%. The stock should be worth ________ today. A) $33.00 B) $39.86 C) $55.00 D) $66.00 E) $40.68
Homework Answers
The stock should be worth today equal
to=1.2/1.14+1.5/1.14^2+2/1.14^3+2/1.14^3*(1+10%)/(14%-10%)=40.680
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Exercise Bicycle Company is expected to pay a dividend in year 1
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