1 answer

Timber Co. just paid its annual dividend of $3.82 and expects to reduce this dividend by...

Question:

Timber Co. just paid its annual dividend of $3.82 and expects to reduce this dividend by 6 percent each year, indefinitely. What is the per share value of this stock if you require a return of 14.5 percent?


Answers

Timber Co. just paid annual dividend, DO S3.82 Declining growth rate , g Required return of stock , RR-14. 5% DI-D0 * ( 1 + g )-$3.82 * ( 1-6% )-$3.5908 Current price of stock, PO D1/ (RR- g -6% Per year forever $3.5908 / ( 14.5%-(690) ) $3.5908 / ( 14.5% 6% ) $3.5908 / 20.5 % - $17.51609756 S17.52 Per share (Rounded)

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