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What is the dividend at the end of year five

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Dividends of Super Drug, Inc. will grow at 25 percent a year for the next 3 years, 18 percent a year for years 4-6, and at a constant rate of 5 percent thereafter. The company just paid a dividend of $1.50 and you require a 15% rate of return from stocks with this risk level.

Problem 1: What is the dividend at the end of year 5?

a. 3.46

b. 4.08

c. 4.58

d. 2.34

e. 2.93

Problem 2: How much is this stock worth to you?

a. 33.27

b. 11.41

c. 16.45

d. 21.85

e. 50.54

Reference no: EM132958243

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