The company will pay a 12 per share dividend in 16 years, Ask an Expert

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Springboro Tech is a young start-up company. No dividends will be paid on the stock over the next 15 years, because the firm needs to plow back its earnings to fuel growth. The company will pay a $12 per share dividend in 16 years and will increase the dividend by 3 percent per year thereafter. What is the current share price if the required return on this stock is 8 percent?

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