Bonnie's Ice Cream is expecting its ice cream sales to decline due to the increased interest in healthy eating. Thus, the company has announced that it will be reducing its annual dividend by 2 percent a year for the next five years. After that, it will maintain a constant dividend of $2 a share. Last year, the company paid $2.20 per share. What is this stock worth to you if you require a 9.5 percent rate of return?

Question

Quizplus · Accepted Answer

The Answer of Bonnie's Ice Cream is expecting its ice cream sales to decline due to the increased interest in healthy eating. Thus, the company has announced that it will be reducing its annual dividend by 2 percent a year for the next five years. After that, it will maintain a constant dividend of $2 a share. Last year, the company paid $2.20 per share. What is this stock worth to you if you require a 9.5 percent rate of return?

Bonnie's Ice Cream Is Expecting Its Ice Cream Sales to Decline