Question

Moody Farms just paid a dividend of $3.25 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a return of 14 percent for the first three years, a return of 12 percent for the next three years, and a return of 10 percent thereafter. What is the current share price

Answer 1

Cash Flow Year Present value

- 0 0.00

3.41 1 2.99

3.58 2 2.76

3.76 3 2.54

3.95 4 2.38

4.15 5 2.23

4.36 6 2.09

91.46 6 43.94

Current share price = $58.93

Step-by-step explanation: