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What is the new value of a share of summit systems

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Reference no: EM132371638

You read in the paper that Summit Systems has recently revised its growth prospects and now expects its dividends to grow at 3% (instead of 6% pa) per year forever. The company will pay a dividend of $1.50 this year. Equity cost of capital is 11%.

a. What is the new value of a share of Summit Systems stock based on this information?

b. If you tried to sell your Summit Systems stock after reading this news, what price would you be likely to get and why?

Reference no: EM132371638

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