A start up company has declared that it will not pay any dividends on its stock over the next 9 years because it requires all of

Question

3 years ago

14

A start up company has declared that it will not pay any dividends on its stock over the next 9 years because it requires all of

its earnings to be plowed back into the business to fuel growth. The firm will pay a $14 per share dividend 10 years from today and will increase the dividend by 3.9% per year thereafter. If the required rate of return on this stock is 12.5%, what is the current share price

Business