Charlie's Fish Market is planning on paying annual dividends of $1.20, $1.35, and $1.50 over the next 3 years, respectively. After that, Charlie's plans to pay a constant dividend of $1.75 per share
Each year. To compute the value of Charlie's stock today, you should ﬁrst determine the value of the
Stock at the end of year _____.

Question

Quizplus · Accepted Answer

To compute the value of the stock today, you need to determine the present value of the dividends. The constant dividend of $1.75 starts at the end of year 3, so you need to calculate the stock's value at the end of year 3, which will then be discounted back to the present.

Charlie's Fish Market Is Planning on Paying Annual Dividends of $1.20