Martin's yachts is expected to pay annual dividends of $1.40, $1.75, and $2.00 a share over the next three years, respectively. after that, the dividend is expected to remain constant. what is the current value per share at a discount rate of 14 percent?

Po = D1/1+ke + D2/(1+ke)2 + D3/(1+ke)3

Po = $1.40/1+0.14 + 1.75/(1+0.14)2+ $2(1+0.14)3

Po = $1.2281 + $1.3466 + $1.34998

Po = $3.92

Explanation:

The current value per share is equal to dividend paid in each year discounted at the appropriate cost of equity capital of the firm.

Po = Current value per share, D  represents dividend paid and ke = return on equity(discount rate)

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best of luck,

the divergent