How much will you pay for the company stock today

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Poulter Corporation will pay a dividend of $3.25 per share next year. The company pledges to increase its dividend by 5.1 percent per year, indefinitely. If you require a return of 11 percent on your investment, how much will you pay for the company's stock today?

Directions: Work this problem twice, once assuming that the dividend is paid annually and once assuming that the dividend is paid semiannually. Keep the dividend amount the same ($3.25 per share) for both annual and semiannual. When the problem asks "how much will you pay," it is referring to the stock's value. Growth rate and required return are both quoted on an annual basis.

Reference no: EM132675860

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