Kool Eyeglasses Inc. is forecasting its dividends on its common stock over the next four years to be as follows: a $3.00 dividend in year one, a $3.50 dividend in year 2, no dividend in year three, and a $4.50 dividend in year 4. The company also expects that dividends will grow at 6.5% yearly thereafter. Find the stock price today. Assume that r=10%.

Kool Eyeglasses Inc. is forecasting its dividends on its common stock over the next four years to be as follows: a $3.00 dividend in year one, a $3.50 dividend in year 2, no dividend in year three, and a $4.50 dividend in year 4. The company also expects that dividends will grow at 6.5% yearly thereafter. Find the stock price today. Assume that r=10%.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 5P

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