A company currently pays a dividend of 3 per share d0 3 it, Finance Basics

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A company currently pays a dividend of 3 per share d0 3 it

Question: Nonconstant Growth Valuation

A company currently pays a dividend of $3 per share (D0 = $3). It is estimated that the company's dividend will grow at a rate of 21% per year for the next 2 years, and then at a constant rate of 5% thereafter. The company's stock has a beta of 1.45, the risk-free rate is 6.5%, and the market risk premium is 3%. What is your estimate of the stock's current price? Do not round intermediate calculations.

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Finance Basics: A company currently pays a dividend of 3 per share d0 3 it

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