What is applicable discount rate for a period of one quarter

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Today is November15, 2020. U.S.-based company Hamburgler Lukewarm pays 4 equal quarterly dividends before increasing the dividend in the following fiscal year by 4.0% (keeping it constant for 4 payments) and so on. It will pay its next dividend of $0.51 on February 15 (exactly one quarter from now) and keep the dividend at that level for another 3 quarters. The discount rate is 13.900% (EAR). Your goal is to compute the share price.

Problem 1: What is the applicable discount rate for a period of one quarter?

Reference no: EM132716003

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