Explore BrainMass

Explore BrainMass

    Non-Constant Dividends in Spears Inc.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Spears, Inc., has an odd dividend policy. The company has just paid a dividend of $7 per share and has announced that it will increase the dividend by $4 per share for each of the next four years, and then never pay another dividend. If you require an 11% return on the company's stock, how much will you pay for a share today?

    © BrainMass Inc. brainmass.com October 1, 2020, 9:11 pm ad1c9bdddf

    Solution Preview

    We have to find the present value of the dividends:

    Dividend Present value factor Present ...

    Solution Summary

    Non-constant dividends for Spears, Inc is determined with an odd dividend policy.