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Galloway, Inc., just paid a dividend of $3 per share and has announced that it will increase its dividend by $1 per share for each of the next 4 years, and then never pay another dividend. What is the current per share value at a required return of 12.7 percent?

Respuesta :

Answer:

$16.02

Explanation:

Data provided as per the question

Dividend paid $3 per share

Increase its dividend = $1 per share

Number of years = 4 years

required return = 12.7%

The computation of the current per share value is shown below:-

=($4 ÷ (1 + 0.127)) + ($5 ÷ (1 + 0.127)^2) + ($6 ÷ (1 + 0.127)^3) + ($7 ÷ (1 + 0.127)^4

$16.02

Therefore for computing the current per share value we solved the above equation.

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