Two-stage dividend growth model


Thirsty Cactus Corp. just paid a dividend of $1.20 per share. The dividends are expected to grow at 15 percent for the next eight years and then level off to a 5 percent growth rate indefinitely.

Required :

If the required return is 10 percent, what is the price of the stock today?

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Finance Basics: Two-stage dividend growth model
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