Question:
Assume the Wansch Corporation is expected to pay a dividend of $2.25 per share this year. Sales and profit for Wansch are forecasted to grow at a rate of 20% for two years after that, then grow at 5% per year forever. Dividend and sales growth are expected to be equal. If Wansch’s shareholders require a 15% return, the per-share value of Wansch’s common stock based on the dividend discount model is closest to:
A
£28.50
Explaination
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