Ask Question
4 July, 05:37

Atlas Home Supply has paid a constant annual dividend of $2.40 a share for the past 15 years. Yesterday, the firm announced the dividend will increase next year by 10 percent and will stay at that level through Year 3, after which time the dividends will increase by 2 percent annually. The required return on this stock is 12 percent. What is the current value per share?

+2
Answers (1)
  1. 4 July, 06:12
    0
    The current value per share is $25.51

    Explanation:

    P3 = ($2.40x1.10x1.02) / (0.012 - 0.02)

    = 26.928

    P0 = (($2.40x1.10) / 1.12) + (($2.40x1.1) / (1.122) + ((($2.40x1.1) + $26.928) / 1.123)

    = $25.51

    Therefore, The current value per share is $25.51
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Atlas Home Supply has paid a constant annual dividend of $2.40 a share for the past 15 years. Yesterday, the firm announced the dividend ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers