Question

# Could I Industries just paid a dividend of \$1.34 per share. The dividends are expected to...

Could I Industries just paid a dividend of \$1.34 per share. The dividends are expected to grow at a rate of 19.3 percent for the next five years and then level off to a growth rate of 6 percent indefinitely. If the required return is 10 percent, what is the value of the stock today?

(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price of the stock is calcualte by solving the below equation:

Below is the schdelu to verify:

 Year CF Discount Factor Discounted CF 1 \$                 1.60 1/(1+0.1)^1= 0.909090909 0.909090909090909*1.59862= 1.45 2 \$                 1.91 1/(1+0.1)^2= 0.826446281 0.826446280991735*1.90715366= 1.58 3 \$                 2.28 1/(1+0.1)^3= 0.751314801 0.751314800901578*2.27523431638= 1.71 4 \$                 2.71 1/(1+0.1)^4= 0.683013455 0.683013455365071*2.71435453944134= 1.85 5 \$                 3.24 1/(1+0.1)^5= 0.620921323 0.620921323059155*3.23822496555352= 2.01 5 \$               85.81 1/(1+0.1)^5= 0.620921323 0.620921323059155*85.8129615871683= 53.28 NPV = Sum of all Discounted CF 61.89

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