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A stock just paid a dividend of $1.76. The dividend is expected to grow at 29.19%...

A stock just paid a dividend of $1.76. The dividend is expected to grow at 29.19% for two years and then grow at 3.94% thereafter. The required return on the stock is 12.31%. What is the value of the stock?

Answer format: Currency: Round to: 2 decimal places.

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Answer #1

Dividend just paid (D0) = $1.76

Dividend expected to grow for next 2 year (g) = 29.19%

Growth rate for Dividend therafter (g1) = 3.94%

Required rate of Return (Ke) = 12.31%

Calculating the Current Value of Stock:-

P0 = $2.0245 + $2.3288 + $28.9195

P0 = $33.27

So, the Value of Stock is $33.27

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