Yum corp does not pay any dividends because it is expanding, Ask an Expert

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YUM Corp does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect YUM Corp to begin paying dividends, with the 1st dividend of $1.25 coming 3 (three) years from today. The dividend should grow rapidly - at a rate of 75% per year - during Years 4 and 5. After Year Five (5), the company should grow at a constant rate of 10% per year. If the required return on the stock is 15%, what is the value of the stock today (assume the market is in equilibrium with the required return equal to the expected return)? Round your answer to the nearest cent. Do not round your intermediate computations.

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Financial Management, Finance

Category:- Financial Management
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