Question 16 Growth Alley Productions pays no dividend at the present time. The company plans to start paying an annual dividend in the amount of R0,40 a share for two years commencing four years from...

Question 16

Growth Alley Productions pays no dividend at the present time. The company plans to start paying an annual dividend in the amount of R0,40 a share for two years commencing four years from today. After that time, the company plans on paying a constant R0,75 a share annual dividend indefinitely. How much are you willing to pay to buy a share of this stock today if your required return is 11,60%?

1. R 4,23

2. R 6,51

3. R 8,78

4. R10,34