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What is approximate value of its expected dividend next year

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Reference no: EM132990039

Question - Modular Systems Inc. is expecting both earnings and dividends to grow by 15% in Year 1, 0% in Year 2, by 5%in Year 3, and at a constant rate of 10 percent in Year 4 and thereafter. The required return on Modular is 15 percent, and it sells at its equili­brium price, P0 = $49.89. What is the approximate value of its expected dividend next year?

A) $0

B) $1.25

C) $1.75

D) $2.45

E) $2.85

Reference no: EM132990039

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