The company will maintain that dividend growth rate forever


The Gordon Corporation has just paid a dividend of $6.90 a share. The company will increase its dividend by 8 percent next year. The company will then reduce its dividend growth rate by 1.5 percent each year until the dividend reaches the industry average of 5 percent growth. The company will maintain that dividend growth rate, forever. The required rate of return for the Gordon Corporation is 17 percent. What is the price for the stock?

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Financial Management: The company will maintain that dividend growth rate forever
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