Luke is considering investing in Vaviala-Dennis Hotel Management Stock. The company is expected to pay $20 dividend per share next year. After next year the dividend is expected to grow with 5% forever. The discount rate is 15%.
What is the price of one share today (time=0)?
What is the market value of equity today if the number of outstanding shares is 1 million.
What is the price per share 5 years from now after the dividend is paid. When you purchase the stock in year 5 the first dividend you will receive will be in year 6.