Problem:
The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 17 percent a year for the next 4 years and then decreasing the growth rate to 6 percent per year. The company just paid its annual dividend in the amount of $2.40 per share.
Required:
Question: What is the current value of one share of this stock if the required rate of return is 7.90 percent?
Note: Show supporting computations in good form.