Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 7.5 percent thereafter. The required return is 13 percent and the company just paid a dividend of $2.55. a. What are the dividends each year for the next four years? b. What is the share price in three years?  c. What is the current share price? Please answer all parts

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 7.5 percent thereafter. The required return is 13 percent and the company just paid a dividend of $2.55.

a. What are the dividends each year for the next four years?

b. What is the share price in three years? 

c. What is the current share price?

Please answer all parts

Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent
for the next three years, with the growth rate falling off to a constant 7.5 percent
thereafter. The required return is 13 percent and the company just paid a dividend of
$2.55.
What are the dividends each year for the next four years? (Do not round intermediate
calculations and round your answers to 2 decimal places, e.g., 32.16.)
Year 1
Year 2
Year 3
Year 4
What is the share price in three years? (Do not round intermediate calculations and
round your answer to 2 decimal places, e.g., 32.16.)
Share price in three years
What is the current share price? (Do not round intermediate calculations and round
your answer to 2 decimal places, e.g., 32.16.)
Current share price
Transcribed Image Text:Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next three years, with the growth rate falling off to a constant 7.5 percent thereafter. The required return is 13 percent and the company just paid a dividend of $2.55. What are the dividends each year for the next four years? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Year 1 Year 2 Year 3 Year 4 What is the share price in three years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price in three years What is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price
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