Problem:
The Know-It-All Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 20% a year for the next 4 years and then decreasing the growth rate to 5% per year. The company just paid its annual dividend in the amount of $1.00 per share. What will be the price of the one share in year 4 if the required rate of return is 9.25%?
Explain in detail and show all work.