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Management Studies

Assume that the average firm in your company's industry is expected to grow at a constant rate of 6 percent and its dividend yield is 7 percent.

Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 50 percent [D₁ = D₀(1 + g) D₀(1.50)] this year and 25 percent the following year, after which growth should match the 6 percent industry average rate.

The last dividend paid (D₀) was $1. What is the value per share of your firm's stock?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M92185699

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