Explore BrainMass

Explore BrainMass

    Supernormal Growth, Negative Growth, and Dividends

    Not what you're looking for? Search our solutions OR ask your own Custom question.

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

    Needs to be done on excel spreadsheet. Please be as explicit as possible. Thanks

    1. Supernormal Growth. Finley Co. is growing quickly. Dividends are expected to grow at 25 percent rate for the next three years, with a growth rate falling off to a constant 6 percent thereafter. If the required rate of return is 14 percent and the company just paid a $2.50 dividend, what is the current share price?

    2. Negative Growth. Antiques 'R'Us is a mature manufacturing firm. The company just paid a $10. dividend, but management expects to reduce the payout by 10% per year, indefinitely. If you require a 13 percent return on this stock, what will you pay for a share today?

    3. Finding the Dividend. Tubby Corporation stock currently sells for $72 per share. The market requires a 14 percent return on the firm's stock. If the company maintains a constant 6 percent growth rate in dividends, what was the most recent dividend per share paid on the stock?

    © BrainMass Inc. brainmass.com November 30, 2021, 12:15 am ad1c9bdddf
    https://brainmass.com/business/finance/supernormal-growth-negative-growth-dividends-30467

    Solution Summary

    This solution assists with the provided questions.

    $2.49

    ADVERTISEMENT