# Hot Wings, Inc., has an odd dividend policy. The company has just paid a dividend of $10.25 per... ## Question: Hot Wings, Inc., has an odd dividend policy. The company has just paid a dividend of$10.25 per share and has announced that it will increase the dividend by $8.25 per share for each of the next four years, and then never pay another dividend. If you require a return of 12 percent on the company's stock, how much will you pay for a share today? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) ## Dividend Growth Model The dividend growth model can be used to find the intrinsic value of a stock that pays regular dividends. The model assumes that the current stock price reflects the present value of all future dividend inflow for investors. ## Answer and Explanation: . Given - • Dividend (Do) =$10.25

Since dividend will increase by \$8.25 for each of the next 4 Years, the dividends are as follows -

• Year 1 Dividend...

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