Galloway, Inc., just paid a dividend of $3 per share and has announced that it will increase its dividend by $1 per share for each of the next 4 years, and then never pay another dividend. What is the current per share value at a required return of 12.7 percent?

(A) $20.08

(B) $21.15

(C) $16.02

(D) $18.60

(E) $17.33

Question

Business

Oliver Barker

13 June, 11:40

Galloway, Inc., just paid a dividend of $3 per share and has announced that it will increase its dividend by $1 per share for each of the next 4 years, and then never pay another dividend. What is the current per share value at a required return of 12.7 percent?

(A) $20.08

(B) $21.15

(C) $16.02

(D) $18.60

(E) $17.33

+2

Answers (1)

Know the Answer?

Mario Huff · Answer 1

(C) $16.02

Explanation:

Current per share value at required return of 12.7 percent

= ($4 / (1+0.127)) + ($5 / (1+0.127) 2) + ($6 / (1+0.127) 3) + ($7 / (1+0.127) 4

=$ 16.02 ((C) $16.02)