please show work on how to solve thanks.
PPR Corporation plans to begin paying dividends in 5 years. The first five dividends will be as follows: D5 = $5.12, D6 = $4.86, D7 = $4.76, D8 = $4.52, and D9 = $4.11 respectively. After five years of dividend payments, dividends are expected to grow at a constant rate of 6.00 percent forever. PPR's required rate of return is 15.00 percent. What is the current price (P0) of PPR common stock?
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$71.78 $57.49 $22.84 $13.76 |
Value after year 9=(D9*Growth rate)/(Required return-Growth rate)
=(4.11*1.06)/(0.15-0.06)
=$48.4067(Approx)
Hence current price=Future dividends*Present value of discounting factor(rate%,time period)
=5.12/1.15^5+4.86/1.15^6+4.76/1.15^7+4.52/1.15^8+4.11/1.15^9+48.4067/1.15^9
=$22.84(Approx).
please show work on how to solve thanks. PPR Corporation plans to begin paying dividends in...
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