Super Sounds is expecting a period of intense growth and has decided to retain more of their earnings to help ﬁnance that growth. As a result, they are going to reduce the annual dividend by
20% a year for the next three years. After that they will maintain a constant dividend of $1 a share.
Last year, the company paid $2.25 as the annual dividend per share. What is the market value of
This stock if the required rate of return is 16%?

Question

Quizplus · Accepted Answer

The Answer of Super Sounds is expecting a period of intense growth and has decided to retain more of their earnings to help ﬁnance that growth. As a result, they are going to reduce the annual dividend by
20% a year for the next three years. After that they will maintain a constant dividend of $1 a share.
Last year, the company paid $2.25 as the annual dividend per share. What is the market value of
This stock if the required rate of return is 16%?

Super Sounds Is Expecting a Period of Intense Growth and Has