Question

Mobray Corp. is experiencing rapid growth. Dividends are expected to grow at 26 percent per year during the next three years, 16 percent over the following year, and then 7 percent per year indefinitely. The required return on this stock is 12 percent, and the stock currently sells for $70 per share. What is the projected dividend for the coming year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

D1 = 2.39

Explanation:

Expected Dividend can be found out by solving the following equation attached in the image.

In the formula D1 = expected dividend, Gs = 26%, Gm = 16%, gL = 7%, r =12%

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in 2 sheets with the formulas indications.