"interest of delay"
Classified in Mathematics
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9.14 Nonconstant growth. Computech corporation is expanding Rapidly and currently needs to retain all of its earnings; hence, it does not Pay dividends. However, investors expect computech to begin paying dividends, Beginning with a dividend of $0.50 coming 3 years from today. The dividend Should growth rapidly at a rate of 35% per year during years 4 and 5; but after Year 5, growth should be constant 7% per year. If the required return on computech Is 13%, what is the value of the stock today?
solution
Calculate the dividend cash flows and place them on a time Line. Also, calculate the stock price at The end of the supernormal growth period, and include it, along with the Dividend to be paid at t = 5, as CF5. Then, enter the cash flows as... Continue reading ""interest of delay"" »