A start-up company in a high-growth industry is expected to pay its first quarte


A start-up company in a high-growth industry is expected to pay its first quarterly dividend of $1.29 per share2years from today. This quarterly dividend is then expected to grow at 4.4% per quarter until the end of the firm’s high-growth period. The high-growth period will end after the quarterly dividend is paid7years from today. Then the firm will enter its low-growth period in which the dividend growth rate is 1.2% per quarter, in perpetuity. Assume the nominal rate of return is14.0%,compounded quarterly.


Leave a Reply

Your email address will not be published.