The company will assume a constant growth dividend policy, Financial Management

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The company will assume a constant growth dividend policy

AVZ is a start-up company who is using all its cash to growth so it does not plan to pay dividends for the next 6 years. The company then plans to start paying annual cash dividends starting in year 7 of $6.00 for 14 years. Thereafter, the company will assume a constant growth dividend policy and the estimated growth rate in dividends forever after that point is 3%. The price of the stock is set to yield a return of 11%. What is the price of this stock today?

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Financial Management: The company will assume a constant growth dividend policy

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