What is the market price of sawadee

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Sawadee Corporation just paid a $1.40 per share annual dividend. The company is planning on paying $1.50, $1.65, $1.90, and $2.00 a share over the next 4 years, respectively. After that, the dividend will be a constant $2.25 per share per year.

What is the market price of Sawadee if the market rate of return is 12%?

What would be the market price if the dividends increase by 4% annually from year 5 onwards, instead of a constant dividend of $2.25?

If Sawadee changes its dividend policy and decide not to pay constant dividend or dividend increase from year 5 onwards, what could be the impact on its stock price? Please explain.

Reference no: EM132622853

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