Problem 7.17 – Dividends Over the Next Four Years

Essentials of Corporate Finance

Ross, Westerfield, and Jordan

10th Edition and 11th Edition

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A corporation is expected to pay a series of dividends over the next few years, and then maintain a constant growth rate in dividends in the future. If the required return on the stock is known, what is the current share price? Determine the share price given dividends for the next couple years and then a constant growth rate forever after that.

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