Question

Now or Later, Inc. pays an annual dividend to its shareholders. The firm paid a dividend of $0.50 six months ago and the next dividend will be paid 6 months (half a year) from today. Investors expect the next four annual dividend to be $1.00, $2.00, $3.00, and $4.00. After that, investors expect the dividend to grow at 5% per year, forever. What is one share of this stock worth today if the required return is 8%. Round your final answer to the nearest tenth of a dollar (e.g., $92.1)

Answer 1

	8.0000%
Cash flows	Year	Discounted CF
1.00	0.5	0.96
2.00	1.5	1.78
3.00	2.5	2.47
4.00	3.5	3.06
140.00	3.5	106.94

price of the share = 115.22