Answer to Question #180422 in Finance for Ketty

Question #180422

1.     Sky, Inc. paid a dividend of $4.00 per share on its common stock yesterday. Dividends are expected to grow at a constant rate of 10% for the next three years, at which point the dividends will begin to grow at a constant rate indefinitely. If the stock is selling for $40 today and the required return is 11%, what it the expected annual dividend growth rate after year three? Please share details.


1
Expert's answer
2021-04-19T18:45:58-0400

We solve by the following formula:



or -2.46%


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