Calculate expected dividends worth

Reference no: EM1355658

You are considering the purchase of Lokin, Inc. The firm just paid a dividend of $4.20 per share. The stock is selling for $115 per share. Security analysts agree with top management in projecting steady growth of 12% in dividends and earnings over the foreseeable future. Your required rate of return for stocks of this type is 17.5%. If you were to purchase and hold the stock for three years, what would the expected dividends be worth today?

a. $12.60
b. $9.21
c. $17.12
d. $15.55
e. $11.46

Reference no: EM1355658

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