Analysts expect the companys dividend to grow 60 the next, Financial Management

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Analysts expect the companys dividend to grow 60 the next

Rainbow Industries, Inc. just paid a dividend of $1 per share of common stock. Analysts expect the company's dividend to grow 60% the next two years, and then settle into a constant growth rate of 8%.

The required rate of return on the company's stock is 12%.

QUESTION: What should be the current price of the company's stock? Show all these calculations:

D1=

D2=

D3 =

P2 =

P0 =

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Financial Management: Analysts expect the companys dividend to grow 60 the next

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Financial Management: Analysts expect the companys dividend to grow 60 the next

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