Problem:
A firm just paid a dividend of $2.2. The dividend is expected to grow at a 25% rate for the next 3 years and at a 7% rate thereafter.
Instruction:
Question: What is the value of the stock if the required rate of return is 12%?
- $87.60
- $80.41
- $73.70
- $60.03
Note: Provide specific examples to support your answers.