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 8:45 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 $1.25 coming 3 years from today. The
dividend should grow rapidly - at a rate of 49% per year - during
Years 4 and 5; but after Year 5, growth should be a constant 4% per
year. If the required return on Microtech is 17%, 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 $1.25 coming 3 years from today. The
dividend should grow rapidly - at a rate of 49% per year - during
Years 4 and 5; but after Year 5, growth should be a constant 4% per
year. If the required return on Microtech is 17%, what is the value
of the stock today? Round your answer to the nearest cent. (Show
full steps and answer)