Maloney, Inc, has an odd policy. The company has just paid a dividend of $3.50 per share and has announced that it will increase the dividend by $4.50 per share for each of the next 5 years, and then never pay another dividend. If you require a return of 11 percent on the company's stock, how much will you pay for a share today?
The Jackson- Timberlake Wardrobe Co. just paid a dividend of $1.95 per share on its stock. the dividends are expected to grow at a constant rate of 4 percent per year indefinitely. If investors require a return of 10.5 percent on the Jackson co. stock, what is the current price, what will be the price in three years? in 15 years?