Monster Inc just paid a dividend of $1.33. Its stock has a dividend growth rate of...

Monster Inc just paid a dividend of $1.33. Its stock has a dividend growth rate of 7.6% and a required return of 12.21%. What is the current stock price if we anticipate dividends stopping in 10 years?

Expert Solution

Current Price of the Stock = PV of Dividents recievable

= 10.64

D1 = $ 1.33 + $ 1.33 * 7.6%

= $1.33 + $.10

= $ 1.43

Year	Item	Dividents	PVF @ 12.21 %	PV of Dividents
1	D1	1.43	0.8912	1.28
2	D2	1.54	0.7942	1.22
3	D3	1.66	0.7078	1.17
4	D4	1.78	0.6308	1.12
5	D5	1.92	0.5621	1.08
6	D6	2.06	0.5010	1.03
7	D7	2.22	0.4465	0.99
8	D8	2.39	0.3979	0.95
9	D9	2.57	0.3546	0.91
10	D10	2.77	0.3160	0.87
	PV of Dividents			10.64

jeff jeffy answered 1 year ago

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