Current value per share
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Atlas Home Supply has paid a constant annual dividend of $2.40 a share for the past 15 years. Yesterday, the firm annunced the dividend will increase next year by 10 percent and will stay at that level through year three, after which time the dividends will increase by 2 percent annually. the required return on the stock is 12 percent. what is the current value per share?
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The solution explains how to calculate the current value per share.
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The current value per share is the present value of all dividends. In this case the dividends increase at 10% for 1 year and remain constant till year 3 and then grow by 2%. When the growth becomes constant we can use the ...
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