Problem:
Storico Co. just paid a dividend of $1.60 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever.
Required:
Question: If the required return on Storico stock is 17 percent, what will a share of stock sell for today?
Note: Please explain comprehensively and give step by step solution.