A stock expects to pay a dividend of $3.72 per share next year. The dividend is...

A stock expects to pay a dividend of $3.72 per share next year. The dividend is expected to grow at 25 percent per year for three years followed by a constant dividend growth rate of 4 percent per year in perpetuity. What is the expected stock price per share 5 years from today, if the required return is 12 percent?

Expert Solution

What is the expected stock price per share 5 years from today, if the required return is 12 percent?
P5=D6/(r-g)=3.72*1.25^3*1.04*1.04/(12%-4%)=98.23125

Colby Messinger answered 2 years ago

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