Problem:
The firm projects a rapid growth of 40 percent for the next two years and then a growth rate of 20 percent for the following two years. After that the firm expects to pay its first dividend of $1.25 a year from now.
Required:
Question: If your required rate of return on such stocks is 20 percent, what is the current price of the stock?
Note: Please explain comprehensively and give step by step solution.