Sedge Inc Has a 12% Required Rate of Return

question 170

Multiple Choice

Sedge Inc. has a 12% required rate of return. It does not expect to pay dividends for seven years. At the beginning of year 8, it will pay $2.00 per share dividend. At that time, Sedge Inc. expects its dividend to grow at 7% forever. Calculate the stock price now.

• A) $40.00
• B) $35.71
• C) $31.88
• D) $24.62
• E) $18.09

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