...share price of okra? Okra, Inc. is a young start-up company. No dividends will be paid on the stock for the
next four years, because the ?firm needs to plow back its earnings (i.e., not to pay out
dividends) to fuel growth. Four years from today (t = 4), Okra will pay its first annual
dividend of $4 per share. Dividends will increase by 4 percent per year, thereafter. If
the required rate of return on the Okra stock is 14 percent, what is the current share
price of Okra? (Be careful with the timing.)
(a) 23.68
(b) 27.00
(c) 27.32
(d) 30.05
next four years, because the ?firm needs to plow back its earnings (i.e., not to pay out
dividends) to fuel growth. Four years from today (t = 4), Okra will pay its first annual
dividend of $4 per share. Dividends will increase by 4 percent per year, thereafter. If
the required rate of return on the Okra stock is 14 percent, what is the current share
price of Okra? (Be careful with the timing.)
(a) 23.68
(b) 27.00
(c) 27.32
(d) 30.05