If the required return on the stock is 16 what is the value


Simpkins Ltd. is expanding rapidly, and it currently needs to retain all of its earnings; hence it does not pay any dividends. However, investors expect Simpkins to begin paying dividends, with the first dividend of $0.50 coming 3 years from today. The dividend should grow rapidly-at a rate of 80% per year-during Years 4 and 5, After Year 5, the company should grow at a constant rate of 7% per year. If the required return on the stock is 16%, what is the value of the stock today?

Request for Solution File

Ask an Expert for Answer!!
Financial Management: If the required return on the stock is 16 what is the value
Reference No:- TGS02762003

Expected delivery within 24 Hours