Problem:
Video Toys manufacturers and sells arcade games. Dividends are currently $1.50 per share and are expected to grow at a 15% compound annual rate over the next three years. Beyond that time, Video Toys' dividends are expected to grow at 5% per year indefinitely.
Required:
Question: What is the current value per share of Video Toys' common stock if your required rate of return is 15%?
Note: Please explain comprehensively and give step by step solution.