The Mintcoin Inc has just paid an annual dividend of 40 cents per share. You forecast that dividends of Mintcoin Inc will grow at the rate of 25% a year over the next four-year period. From year five on, you expect the subsequent growth rate of dividends to decrease to 8%, the industry average
a. Construct the time line, showing dividends of the company.
b. If the required rate of return for the stock is 12%, calculate its price.
Answer a) D1 = 0.50 D2 = 0.625 D3 = 0.78125 D4 = 0.9765625 D5 = 1.0546875 Timeline graph is... View the full answer
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current dividend is 0.40 with 25% growth for the next 4yrs year 1 0.40*1.25 = 0.500 year 2 = 0.50*1.25 = 0.625 year 3 =... View the full answer