Problem:
A stock currently pays a dividend of $3.90 per share (D0 = $3.90). It is estimated that the company's dividend will grow at a rate of 22.5% per year for the next 2 years, then at a constant rate of 6.60% thereafter. The company's stock has a beta of 1.70, the risk-free rate is 8.25%, and the market risk premium is 10.50%.
Question: What is your estimate of the stock's current price? Please explain in detail and show your work.