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.).© BrainMass Inc. brainmass.com October 1, 2020, 9:22 pm ad1c9bdddf
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% ...
The solution explains step-by-step how to calculate the projected dividend for the coming year.