The cfo of b-to-c inc a retailer of miscellaneous consumer, Ask an Expert

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The CFO of B-to-C Inc., a retailer of miscellaneous consumer products, recently announced the objective of paying its first (annual) cash dividend of $0.50 in four years. Thereafter, the dividend is expected to increase by 7 percent per year for the foreseeable future. The company’s required rate of return is 15 percent.

A. Assuming that you have confidence in the CFO’s dividend target, what is the value of the stock of B-to-C today?

B. Suppose that you think that the CFO’s outlook is too optimistic. Instead, you believe that the first dividend of $0.50 will not be received until six years from now. What is the value of the stock?

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Financial Management, Finance

Category:- Financial Management
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