Frazier Inc. paid a dividend of $4 last year (D0). The firm is expecting dividends to...
Frazier Inc. paid a dividend of $4 last year (D0). The firm is expecting dividends to grow at 21% in years 1–2 and 10% in Year 3. After that growth will be constant at 8% per year. Similar investments return 14%. Calculate the value of the stock today.
Homework Answers
Frazier Inc value of the stock today
=(4*(1+21%)^1)/(1+14%)^1+(4*(1+21%)^2)/(1+14%)^2+(4*(1+21%)^2*(1+10%))/(1+14%)^3+((4*(1+21%)^2*(1+10%)*(1+8%))/(14%-8%))/(1+14%)^3
=91.37
the above is answer..
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