Finding out the value of the stock today


Question: A company is expanding rapidly and is not paying dividends at this time. Investors expect it to begin paying dividends beginning 3 years from today starting at $1.00. The dividend should grow rapidly - at 50% a year during years 4 and 5. After year 5 the company should grow at 8%/year. If the required return on the stock is 15% what is the value of the stock today?

Solution Preview :

Prepared by a verified Expert
Finance Basics: Finding out the value of the stock today
Reference No:- TGS01839958

Now Priced at $20 (50% Discount)

Recommended (96%)

Rated (4.8/5)