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Nonconstant Growth Valuation

A company currently pays a dividend of $2.5 per share (D0 = $2.5). It is estimated that the company's dividend will grow at a rate of 16% per year for the next 2 years, and then at a constant rate of 5% thereafter. The company's stock has a beta of 1, the risk-free rate is 6.5%, and the market risk premium is 4%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent. $

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92749737

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