LRCX currently pays $5 in dividend. You think the company can growth dividend at 20% for...

LRCX currently pays $5 in dividend. You think the company can growth dividend at 20% for the next 5 years. From year 6 on, the company can growth dividend at 10% a year. The beta for LRCX is 1.2 and the market risk premium is 8%, with risk free rate of 2.5%. What should be the price of LRCX today according to dividend discount model?

Expert Solution

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

Cell reference -

jeff jeffy answered 4 months ago

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