Presently, Stock a Pays a Dividend of $2

question 7

Essay

Presently, Stock A pays a dividend of $2.00 a share, and you expect the dividend to grow rapidly for the next four years at 20 percent. Thus the dividend payments will be
       Year      Dividend
         1        $1.20
         2         1.44
         3         1.73
         4         2.07

After this initial period of super growth, the rate of increase in the dividend should decline to 8 percent. If you want to earn 12 percent on investments in common stock, what is the maximum you should pay for this stock?

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Definitions:

Different Values

Varied beliefs or principles that individuals or groups consider important, influencing their actions and decisions.

Socialization

The process by which individuals learn and adopt the norms, values, and behaviors appropriate to their society or social group.

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Employees who represent and promote their company's brand, values, and mission both inside and outside the organization.

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