The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 16 percent a year for the next 4 years and then decreasing the growth rate to 4 percent per year. The company just paid its annual dividend in the amount of $2.30 per share.
Required:
Question: What is the current value of one share of this stock if the required rate of return is 7.80 percent?
$113.97
$95.49
$84.40
$97.79
$116.27
Note: Be sure to show how you arrived at your answer.