Hunter Petroleum Corporation will pay a $2.00 dividend at the end of this year. The dividend is expected to grow at a constant rate of 5% over the following three years and then remain constant at a rate of 3% forever. The required rate of return is 12 %. Calculate the current value of the stock.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 12P
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Hunter Petroleum Corporation will pay a $2.00 dividend at the end of this year. The dividend is expected
to grow at a constant rate of 5% over the following three years and then remain constant at a rate of 3%
forever. The required rate of return is 12 %. Calculate the current value of the stock.
Transcribed Image Text:Hunter Petroleum Corporation will pay a $2.00 dividend at the end of this year. The dividend is expected to grow at a constant rate of 5% over the following three years and then remain constant at a rate of 3% forever. The required rate of return is 12 %. Calculate the current value of the stock.
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