What is the value per share of you firm's stock?

Anonymous
timer Asked: Nov 18th, 2015
account_balance_wallet $5

Question Description

Your company has a required rate of return 7%. The company has completed a new
20
project that
is expected to grow dividends at a rate of 50% the first year an
d 25% the
following year, after which growth should be at a constant rate of 6%. The last dividend paid was $1.00. What is the value per share of you firm's stock?

Tutor Answer

anusha_reddy
School: Cornell University

Thank you for the opportunity to help you with your question!

Price = (1*1.50)/1.07 + (1*1.50*1.25)/1.07^2 + (1*1.50*1.25)/(.07-.06)/1.07^3

= 156.10


Please let me know if you need any clarification. I'm always happy to answer your questions.

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Review

Anonymous
Excellent job

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