Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay div
Posted: Sun Apr 10, 2022 8:44 am
Microtech Corporation is expanding rapidly and currently needs
to retain all of its earnings; hence, it does not pay dividends.
However, investors expect Microtech to begin paying dividends,
beginning with a dividend of $1.50 coming 3 years from today. The
dividend should grow rapidly - at a rate of 29% per year - during
Years 4 and 5; but after Year 5, growth should be a constant 10%
per year. If the required return on Microtech is 14%, what is the
value of the stock today? Round your answer to the nearest cent.
(Show full steps and answer)
to retain all of its earnings; hence, it does not pay dividends.
However, investors expect Microtech to begin paying dividends,
beginning with a dividend of $1.50 coming 3 years from today. The
dividend should grow rapidly - at a rate of 29% per year - during
Years 4 and 5; but after Year 5, growth should be a constant 10%
per year. If the required return on Microtech is 14%, what is the
value of the stock today? Round your answer to the nearest cent.
(Show full steps and answer)