A company will pay $2 dividends next year. These dividends are expected to grow at a rate of 15% for four years. Afterwards, the long term growth rate is expected to settle at 4%. The published beta for the stock is 1.2, the expected rate of return on the market is 13% and the current risk free rate is 3%.
a. Calculate the company's dividends to from year 1 to year 5?
b. MVI's beta is 1.6, the expected return on the market is currently 12.75 percent, and the risk free rate is 4%? What should be the company's required return?
c. Calculate the company's stock price at the end of year 4 as the constant growth period begins.
d. Calculate the company's stock price today.