Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Staton-Smith Software is a new start-up company and will not pay dividends for the first five years of operation. It will then institute an annual cash
dividend policy of $3.75 with a constant growth rate of 5%, with the first dividend at the end of year six. The company will be in business for 25 years total.
What is the stock's price if an investor wants
a. a return of 11% ?
b. a return of 15%?
c. a return of 24%?
d. a return of 38% ?
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Transcribed Image Text:Staton-Smith Software is a new start-up company and will not pay dividends for the first five years of operation. It will then institute an annual cash dividend policy of $3.75 with a constant growth rate of 5%, with the first dividend at the end of year six. The company will be in business for 25 years total. What is the stock's price if an investor wants a. a return of 11% ? b. a return of 15%? c. a return of 24%? d. a return of 38% ?
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