Question: Farah's Fashions (FF) just paid their first ever dividend of $1.20 per share. FF expects dividends will increase at the rate of 4% annually indefinitely. If the appropriate discount rate is 10%, then what is the value of a share of FF stock?
Charlie's Computers (CC) is a quickly growing firm that just paid a $2.00 per share dividend. CC expects, revenues, net income and dividends to grow 20% next year, 15% the following year, 10% the next year and then level off to a 5% growth rate indefinitely. If the appropriate discount rate is 9%, then what is the value of a share of CC stock?