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20 January, 21:05

Oriole Corp. will pay dividends of $5.00, $6.25, $4.75, and $3.00 in the next four years. Thereafter, management expects the dividend growth rate to be constant at 8 percent. If the required rate of return is 17.50 percent, what is the current value of the stock

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  1. 20 January, 21:33
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    Dividend growth model for the valuation of stock

    Year Year Year Year

    1 2 3 4

    8%

    Dividend 5 6.25 4.75 3

    Ifninty dividend 34.42

    Total Cashflows 5 6.25 4.75 37.42

    Present value 1.02 4.52 2.92 19.63

    Value 28.11

    Dividend growth model

    Do (1+g) / Ke-g

    3 (1+8%) / 17.5%-8% = 34.42
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Home » Business » Oriole Corp. will pay dividends of $5.00, $6.25, $4.75, and $3.00 in the next four years. Thereafter, management expects the dividend growth rate to be constant at 8 percent. If the required rate of return is 17.
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