anonymous
  • anonymous
Can anyone help me please?
Finance
katieb
  • katieb
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anonymous
  • anonymous
Thirsty Cactus Corp. just paid a dividend of $1.20 per share. The dividends are expected to grow at 35 percent for the next 8 years and then level off to a 6 percent growth rate indefinitely. Required : If the required return is 13 percent, what is the price of the stock today?
anonymous
  • anonymous
\[d1=1.20(1+0.35)\div1.13^{1}\] \[d2=d1(1.035)\div(1.13)^{2}\] . . .d8\[=d7(1.035)\div(1.13)^{8}\] last cumulative dividend will be dn=\[d8\div(0.06-0.35)\]
anonymous
  • anonymous
now all these dividends to get the price of stock today

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anonymous
  • anonymous
in d2 and d7 i have written 1.035...sorry i wroye it by mistake ..it will be 1.35

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