Purchase Solution

# Projected dividend

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Janicek Corp. is experiencing rapid growth. Dividends are expected to grow at 30 percent per year during the next 3 years, 17 percent over the following year, and then 3 percent per year indefinitely. The required return on this stock is 13 percent, and the stock currently sells for \$60 per share. The projected dividend for the coming year is \$? (Round answer to 2 decimal places, e.g. 32.16.).

##### Solution Summary

The solution explains step-by-step how to calculate the projected dividend for the coming year.

##### Solution Preview

The price of the stock is the present value of all dividends. We start with some value of dividend now, say D0 = \$1.00. We are given the growth rates so we can calculate the dividends in year 1,2,3 at 30%, year 4 at 17% ...

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