What should the stock sell for today based on a discounted


Jim Cramer of CNBC recently commented that Amazon (AMZN) will start paying dividends in the near fu- ture because of all of the cash flow that it generates (coupled with a cash balance in excess of $19 billion). When pressed on the issue, Jim made a bold forecast that Amazon will start paying its first dividend 5 years from now in the amount of $34.50 per share. Jim also projected that the dividends would grow, over the following 4 years, by 12.0% per year, after which the growth rate would be a constant rate of 7.2%/year, forever. If the appropriate discount rate for Amazon's stock is 10.0%, what should the stock sell for today based on a discounted valuation of the future dividends that Jim Cramer has projected?

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Financial Management: What should the stock sell for today based on a discounted
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