Value of the stock today based on discounted dividend model

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Reference no: EM131569790

Nevada Casinos does not currently pay dividends. Investors expect that it will begin paying $1 per share in exactly 5 years at time 5. That is, they forecast that D2 will be $1 per share. Investors expect that the dividend will then remain at $1 per share forever after that. They require a return of 10% on the stock.

What is the value of the stock today based on the discounted dividend model?

a) $10 b) $6.83 c) $6.21 d) $7.51 e) $9.09

Reference no: EM131569790

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