FTC company has been growing at a rate of 20% per year in recent years. The same growth is expected to last for another 2 years. The current dividend (ie: just paid is 1.60 the required rate of return is 10% and the growth after 2 years is expected to leave at 6%.
(a) Under the aforementioned assumptions, what is FTC's stock price today?
(b) Now assume that Ftc's "supernormal growth" is expected to last another 5 years rather than 2 years. Under this scenerio ( all other assumptions remaining as previously stated), What is FTC's stock price today?