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Suppose Microsoft Co. will pay a dividend of $1.9 per share one year from now (year 1), and $3.8 per share two years from now (year 2). After then (in other words, after the second year) dividends will grow at 3% per year forever. If the firm's equity cost of capital is 5%, what is their current price per share? $182.76 $5.26 $174.31 $195.70

Suppose Microsoft Co. will pay a dividend of $1.9 per share one year from now (year 1), and $3.8 per share two years from now (year 2). After then (in other words, after the second year) dividends will grow at 3% per year forever. If the firm's equity cost of capital is 5%, what is their current price per share? $182.76 $5.26 $174.31 $195.70

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 5P: A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company’s...
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Suppose Microsoft Co. will pay a dividend of $1.9 per share one year from now (year 1), and $3.8 per share two years from now (year 2). After then (in other words, after the second year) dividends will grow at 3% per year forever. If the firm's equity cost of capital is 5%, what is their current price per share? $182.76 $5.26 O $174.31 $195.70
Transcribed Image Text:Suppose Microsoft Co. will pay a dividend of $1.9 per share one year from now (year 1), and $3.8 per share two years from now (year 2). After then (in other words, after the second year) dividends will grow at 3% per year forever. If the firm's equity cost of capital is 5%, what is their current price per share? $182.76 $5.26 O $174.31 $195.70
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