A stock is expected to pay the following dividends: $1.0 in 1 year, $1.5 in 2...

A stock is expected to pay the following dividends: $1.0 in 1 year, $1.5 in 2 years, and $2.0 in 3 years, followed by growth in the dividend of 5% per year forever after that point. The stock's required return is 12%. The stock's current price (Price at year 0) should be $____________.

Expert Solution

Solution :

The stock's current price should be $ 24.87

Please find the attached screenshot of the excel sheet containing the detailed calculation for the above solution :

jeff jeffy answered 1 year ago

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