Currently needs to retain all of its earnings

Assignment Help Financial Management

Reference no: EM131879209

Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.00 coming 3 years from today. The dividend should grow rapidly-at a rate of 19% per year-during Years 4 and 5; but after Year 5, growth should be a constant 4% per year. If the required return on Computech is 12%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.

Reference no: EM131879209

Questions Cloud

What arguments would you use to make the case for the policy : What arguments would you use to make the case for the policy? What argument(s) would your opponents make?

Chain rule for differentiation : What are the similarities and differences between the Chain Rule for differentiation of x^n versus the Power Rule for differentiation?

Estimate weston current equity beta-current cost of capital : Estimate the value of each division. Estimate Weston's current equity beta. Estimate Weston's current cost of capital.

How a providers personal definition of family might impact : Consider how a provider's personal definition of family and family roles might impact the assessment of a child and the child's family.

Currently needs to retain all of its earnings : Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.

How far does he live from his? job : After work the traffic was? heavier, and he drove home at 25 mph. His driving time to and from work was 1 hour and 8 minutes. How far does he live from his? job

Half-life of the element : A superhero is rendered powerless when exposed to 55 or more grams of a certain element. A 600 year old rock that originally contained

How would you incorporate diversity in designing a team : Discuss team identity. Why do you feel attached to certain groups and teams but not to others - How would you incorporate diversity in designing a team

Is work-related stress a legitimate claim : Physical injuries caused by your work, such as back strain and carpel tunnel syndrome, are covered by workers' compensation.

User Account

All Pages