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Question 2/ Firm B next dividend will be $2.5 per share. The dividends are expected to...

Question 2/ Firm B next dividend will be $2.5 per share. The dividends are expected to grow during year 1 by 21.5% and during year 2 by 18.5%. From year 2 to year 6 they are expected to grow by 12%. From year 6 to year 12 there is no growth of the dividends. From year 12 there will be a constant growth rate of 8% forever. The required rate of return on the stocks is 11.5%.

a/ Compute the intrinsic value of the stock now? (Show your steps)
b/ Compute the intrinsic value of the stock at the end of year 2? (Show your steps)

c/ Compute the intrinsic value of the stock at the end of year 8? (Show your steps)

d/ Compute the intrinsic value of the stock at the end of year 22? (Show your steps)

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jeff jeffy answered 1 year ago
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