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A company currently pays a dividend of $2 per share (D0 = $2). It is estimated...

A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 7% thereafter. The company's stock has a beta of 1.85, the risk-free rate is 6%, and the market risk premium is 4%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.

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Answer #1

Estimate of stock price is therefore $43.8

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