The coffee shop Madame Sousou reported a $4.10 earning per share in 2017 and a $2.50...

The coffee shop Madame Sousou reported a $4.10 earning per share in 2017 and a $2.50 dividend per share. Earnings are expected to grow 10% a year from 2018 to 2022. After 2022, the earnings growth rate is expected to drop to a stable 5% and the payout ratio is expected to increase to 70% of earnings. The investors required rate of return is 7%. The value of the share will be determined using the two-stage dividend discount model.

What is the value of the share based on the first stage and the second stage?

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Hope this helps. Let me know if any doubts.

jeff jeffy answered 1 year ago

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