Problem 8.16 – Calculation of Stock Price based on Nonconstant Dividend Policy, Dividends increase by Fixed Dollar Amount

Fundamentals of Corporate Finance

Ross, Westerfield, and Jordan

13th Edition

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Determine the price you are willing to pay for a share of stock today, given a company's nonconstant dividend policy. The dividend starts at a specific amount and increases by a fixed dollar amount for a certain number of years, after which no further dividends will be paid. The required return on the stock is provided.

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