Moody Farms just paid a dividend of $3.25 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a return of 14 percent for the first three years, a return of 12 percent for the next three years, and a return of 10 percent thereafter. What is the current share price

Question

Corey Newman

Business

14 November, 14:28

Moody Farms just paid a dividend of $3.25 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a return of 14 percent for the first three years, a return of 12 percent for the next three years, and a return of 10 percent thereafter. What is the current share price

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Hayden Stafford · Answer 1

Cash Flow Year Present value

- 0 0.00

3.41 1 2.99

3.58 2 2.76

3.76 3 2.54

3.95 4 2.38

4.15 5 2.23

4.36 6 2.09

91.46 6 43.94

Current share price = $58.93