The duo growth company just paid a dividend of 44 per share, Ask an Expert

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The Duo Growth Company just paid a dividend of $4.4 per share. The dividend is expected to grow at a rate of 20% per year for the next 3 years and then to level off to 10% per year forever. You think the appropriate market capitalization rate is 13% per year.

a. What is your estimate of the intrinsic value of a share of the stock? Round your answer to 2 decimal places.

b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? Round your answer to 1 decimal place.

c. What do you expect its price to be 1 year from now? What is the implied capital gain? (Round your answers to 2 decimal places.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91789675

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