Problem:
NU YU announced today that it will begin paying annual dividends. The first dividend will be paid next year in the amount of $0.29 a share. The following dividends will be $0.34, $0.49, and $0.79 a share annually for the following three years, respectively. After that, dividends are projected to increase by 2.4 percent per year.
Required:
Question: How much are you willing to pay today to buy one share of this stock if your desired rate of return is 11 percent?
- $1.90
- $9.70
- $9.63
- $7.61
- $9.41
Note: Be sure to show how you arrived at your answer.