The dividends will grow at constant rate

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McPherson Enterprises is planning to pay a dividend of $2.25 per share at the end of the year (i.e., D1 = $2.25). The company is planning to pay the same dividend each of the following 2 years and will then increase the dividend to $3.00 for the subsequent 2 years (i.e., D4 and D5). After that time the dividends will grow at a constant rate of 5 percent per year. If the required return on the company’s common stock is 11 percent per year, what is the current stock price?

Reference no: EM131014381

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