Question

Storico Co. just paid a dividend of $1.50 per share. The company will increase its dividend...

Storico Co. just paid a dividend of $1.50 per share. The company will increase its dividend by 20 percent next year and then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the required return on the company's stock is 15 percent, what will a share of stock sell for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Stock price $40.99 wrong answer . Please help with solving using excel. Please show work

Homework Answers

Answer #1

The stock price is equal to the present value of future dividends.

The stock sells for $20.35 today

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