X-corp just paid a dividend of 175you expect its dividend, Ask an Expert

Finance

X-Corp. just paid a dividend of $1.75.

You expect its dividend payment to grow by:

20% this year,

12% in year 2, then

8% per year for years 3 & 4, after which

the dividends will grow at an expected rate of 3% into the foreseeable future.

Similar companies have a cost of equity capital of 14%.

QUESTION

What is the maximum price you would pay for this stock?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92406770

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