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What is the dividend per share in year 7

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Reference no: EM132124411

The stock of company TYK pays dividends annually, with next year's dividend expected to be $1 a share. For the next seven years, dividends are expected to grow at a rate of 6% a year. Thereafter, dividends are expected to remain constant.

(a) What is the dividend per share in year 7?

(b) Assume the discount rate is 5%. How much would you pay for a share of Company TYK?

(c) Re-calculate your answer to part b, assuming that the payment grows at a rate of 5% for the first seven years, rather than at a rate of 6%.

Reference no: EM132124411

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