Growth rate in dividends forever-what is current share price

Assignment Help Financial Management

Reference no: EM131013226

Lohn Corporation is expected to pay the following dividends over the next four years: $20, $16, $15, and $8.50. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 15 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Reference no: EM131013226

Questions Cloud

How might you help bill deal with his frustration : To add to Bill's sense of frustration, Mr. Abdullah seemed more interested in engaging in meaningless small talk than in dealing with the substantive issues concerning their business. How might you help Bill deal with his frustration?

What makes healthcare a risky : Compared with other industries, how 'risky' is healthcare to other people who may be ready to lend monies to a healthcare organization or to those who wish to invest monies in a healthcare organization? What makes healthcare a risky or non-risky indu..

Capital structure on its statement of financial position : Assuming you are the financial manager of a for-profit hospital, what is the hospital's cost of capital assuming that the hospital has the following capital structure on its Statement of Financial Position (SFP; also known as a Balance Sheet):

Should managers promote open discussion of stereotypes : Write a 350- to 700-word Microsoft Word paper written in the third person voice in which you analyze and discuss the following: Should managers promote open discussion of stereotypes as part of a strategy for managing diversity

Growth rate in dividends forever-what is current share price : Lohn Corporation is expected to pay the following dividends over the next four years: $20, $16, $15, and $8.50. Afterward, the company pledges to maintain a constant 5 percent growth rate in dividends forever. If the required return on the stock is 1..

Internal equity for the foreseeable future : Southern Alliance Company needs to raise $23 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. What is the true initial cost figure Southern should u..

How much will go towards interest : You have just taken out a $16,000 car loan with a 8% APR, compounded monthly. The loan is for 5 years. When you make your first payment in one month, how much of the payment will go toward the principal of the loan and how much will go towards intere..

What are the appropriate expected rates of returns : The expected return for the general market 11.5 percent and the risk premium in the market is 7.6 percent. Tasaco LBM and Exxos have betas of 0.862,0.633,and 0.529 respectively. What are the appropriate expected rates of returns for the three securit..

Calculate the expected dividend yield : You buy a share of The Ludwig Corporation stock for $21.40. You expect it to pay dividends of $1.07, $1.1449, and $1.2250 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $26.22 at the end of 3 years. Calculate the growth r..

User Account

All Pages