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A stock will pay no dividends for the next 7 years. Then it will pay a...

A stock will pay no dividends for the next 7 years. Then it will pay a dividend of $9.62 growing at 4.31%. The discount rate is 11.34%. What should be the current stock price?

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Expert Solution

Dividend Payment at 8th year = $9.62

Growth Rate = 4.31% or 0.0431

Discount Rate = 11.34% or 0.1134

Stock Price at the end of 7th year =

= $136.84

Stock price today =

= $64.52

jeff jeffy answered 2 years ago
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