Problem 7.16 – Odd Dividend Policy
Essentials of Corporate Finance
Ross, Westerfield, and Jordan
10th Edition and 11th Edition
How much will you pay for a share of Premier, Inc., given that the company has just paid a dividend of $3.75 per share, will increase the dividend by $5 per share for the next four years, and then never pay another dividend, if your required return on the company’s stock is 11 percent? (Your numbers will vary). Determine the current share price for the firm given that the company announced that the firm will increase dividends and then never pay another dividend.
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Your numbers will vary.