Sheridan Corp. will pay dividends of $5.00, $6.25, $4.75, and $3.00 in the next four years. Thereafter, management expects the dividend growth rate to be constant at 7 percent. If the required rate of return is 16.00 percent, what is the current value of the stock? (Round all intermediate calculations and final answer to 2 decimal places, e.g. 15.20.)

Answers

Answer 1

Answer:

The current value of the stock is $33.35

Explanation:

The computation of the current value of the stock is shown below:

Particulars     Dividends   PVIF at 16%    Present value

Dividend 1      $5              0.862             $4.31

Dividend 2      $6.25       0.743               $4.64

Dividend 3       $4.75       0.641               $3.04

Dividend 4       $3            0.552              $1.66

Dividend 5        $3.21      

             ($3 × 1.07)

Price of the

stock in 4 years   $35.67    0.552            $19.70

               ($3.21 ÷ (16% - 7%))

Current value

of the stock                                               $33.35


Related Questions

Other Questions
Nathan is home alone when he hears a knock on the door. He looks through the peephole and sees that it is a stranger at the door. Nathan decides not to open the door. Nathan is showing safety skills in which area? A. Phone B. Home C. Community D. Internet Which orbital can be modeled by a "peanut" shape? Can someone please create me 2 body paragraphs about unrealistic beauty standards. No plagiarism 14. At mid-ocean ridges, molten material (magma) rises from the mantle and erupts as fissure volcanoes. The molten material then spreads out, pushing an older rock to both sides of the ridges. This process is called? * A molecule is made up of two or more atoms bonded together. True or false How does the following sentence contribute to the development of the main idea in the article?This was strong evidence that the innate immune system is responsible for putting farm microbes to good use in the body.A. It shows the connection between the Amish immune systems and their environment.B. It develops the idea that the genes you are born with will determine if you get asthma or not.C. It proves that the Amish are the healthiest group of Americans.D. It gives an example of how farm microbes can hurt children. How could slaveholders grant enslaved people their freedom?Pointe Coupee ConspiracymanumissioncoartacinCode Noir What led many to believe Rowland was guilty of assault?His lawyer could not defend him.The media had prompted accusations.O Family members refused to turn him over.He fled the state and was in hiding. The length of each square on the grid represents 1 cm. The scalefrom an actual rectangle to the drawing is 24 in. to 1 cm. Make anew scale drawing where each centimeter represents 16 in.Label the length and width of your drawing in centimeters. Choose the best synonym for praise to complete the sentence. "I have always admired the work of the children who fought for civil rights in the 1950s and 1960s, so I wanted to write a poem that would them." A. Bless B. tout C. Applaud divide nine by three, then subtract two double the results The cracking of rock due to heat is an example of _______.a.erosionb.physical weatheringc.chemical weatheringd.none of the above Submit your essay on trading practices below.Click here to view the rubric and expectations for this project.Essay trade A number a is a root of P(x) if and only if the remainder, when dividing the polynomial by x+a, equals zero.a. trueb. false Freddie is supporting his argumentative claim with these three subclaims: pets reduce stress, pets teach responsibility, children with pets are more physically active. What is Freddie's claim? Select one: A.Our family needs a pet. B.We should give grandma a pet for her birthday. C.Dogs are the most popular family pets. D.A dog needs a yard. the sum of a number and 6 is no less than 31 An animal shelter spends $3.00 per day to care for each cat and $5.00 per day to care for each dog. Penelope noticed that the shelter spent $69.00 caring for cats and dogs on Tuesday. Penelope found a record showing that there were a total of 17 cats and dogs on Tuesday. How many cats were at the shelter on Tuesday 69 answer this 42069420 The midpoint of AB is M(-6,1). If the coordinates of A are (-5,7), what are thecoordinates of B? SOMEONE JUST GIVE ME THE ANSWER