Problem:
DAA's stock is currently selling for $18.10 per share. The firm's income, assets, and stock price have been growing at an annual rate of 25 percent and are expected to grow at this rate for 3 more years. No dividends have been declared as yet, but the firm intends to declare a dividend of $2.00 at the end of the last year of its period of supernormal growth (so that D3 = $2.00). After that, dividends are expected to grow at the firm's normal growth rate of 8 percent. The firm's required rate of return (r(s)), is 18 percent.
Requirement:
Question: What is the expected, or intrinsic, value of this stock today?
Note: Please show basic calculation