Moody Farms just paid a dividend of $3.25 on its stock. The growth rate in dividends is expected to be a constant 5 percent per year indefinitely. Investors require a return of 14 percent for the first three years, a return of 12 percent for the next three years, and a return of 10 percent thereafter. What is the current share price

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Answer:

Cash Flow Year Present value

             -    0         0.00

        3.41  1         2.99

       3.58  2         2.76

        3.76  3         2.54

        3.95  4         2.38

        4.15  5         2.23

        4.36  6         2.09

       91.46  6         43.94

Current share price = $58.93

Explanation:

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