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King Waterbeds has an annual cash dividend policy that raises the dividend each year by 5%. The most recent dividend, Divo, w

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Answer #1

Current price=D1/(Required return-Growth rate)

1.Current price=(0.4*1.05)/(0.07-0.05)=$21

2.Current price=(0.4*1.05)/(0.1-0.05)=$8.4

3.Current price=(0.4*1.05)/(0.11-0.05)=$7

4.Current price=(0.4*1.05)/(0.15-0.05)=$4.2

5.Current price=(0.4*1.05)/(0.19-0.05)=$3

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