Bill Bailey and Sons pays no dividend at the present time.The company plans to start paying an annual dividend in the amount of €.30 a share for two years commencing two years from today.After that time,the company plans on paying a constant €1 a share dividend indefinitely.Given a required return of 14%,what is the value of this equity?
A)€4.82
B)€5.25
C)€5.39
D)€5.46
E)€5.58

Question

Quizplus · Accepted Answer

The Answer of Bill Bailey and Sons pays no dividend at the present time.The company plans to start paying an annual dividend in the amount of €.30 a share for two years commencing two years from today.After that time,the company plans on paying a constant €1 a share dividend indefinitely.Given a required return of 14%,what is the value of this equity?
A)€4.82
B)€5.25
C)€5.39
D)€5.46
E)€5.58

Bill Bailey and Sons Pays No Dividend at the Present