You cannot use the constant growth model dont try it you


The CRS Company's dividend is expected to grow at a rate of 15% for the next four years. The current dividend is $1.50. At the end of four years, the firm's earnings will be $8.00 per share. An analyst estimates that the appropriate P/E will be 12x earnings. The investor's required rate of return is 14% and the stock is currently selling for $75. What would your recommendation be, and why? You cannot use the constant growth model! Don't try it. You will not get the right answer.

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Finance Basics: You cannot use the constant growth model dont try it you
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