Johnson Signs Inc

question 69

Essay

Johnson Signs Inc.has been able to increase dividends at the rate of 2% per year since the company first started paying dividends in 1957.Johnson has developed a new production technique and can sell their signs at a premium price for the next three years.This immediate revenue boost will allow Johnson to increase dividends at a rate of 12% per year next year,then 10% the following year,and 8% the next year.After that,they intend to revert to their previous slow but steady increase in annual dividends.If current dividends are $2.45 per share and Johnson investors require an annual rate of return of 11%,what is the current price per share for the company's stock?

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