Winter time adventures is going to pay an annual dividend of $2.86 a share on its common stock next year. this year, the company paid a dividend of $2.75 a share. the company adheres to a constant rate of growth dividend policy. what will one share of this common stock be worth five years from now if the applicable discount rate is 11.7 percent?

share price at 5 year is $45.19

Explanation:

given data

annual dividend D1 = $2.86

paid a dividend Do = $2.75

discount rate K = 11.7 percent

to find out

share price of common stock be worth five years

solution

first we get here growth rate that is express as

growth rate =   ..................1

put here value we get

growth rate =

growth rate = 4%

so here dividend at 6 year will be

Dn = Do ×    .............2

D6 = 2.75 ×

D6 = $3.48

so share price at five year will be

P5 =   .................3

P5 =

P5 = $45.19

so share price at 5 year is $45.19

goochi art

Explanation: