Need math help: What is the value per share of your Firm's stock?

Mathematics
Tutor: None Selected Time limit: 1 Day

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 your Firm's stock?

Nov 18th, 2015

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

9Rerured rate of returnKe7%
Constant Growth rateg6%
Last DividedD01
Year 1Year 2
Dividend1.51.875
Value of future dividends
Using formula
P0 = D1/Ke-g$ 198.75
D1 = 1.875*106%
Total1.5200.625
Present value factor (7%)0.9345790.873439
Present value$  1.40$ 175.23
Total present value$ 176.64


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Nov 18th, 2015

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Nov 18th, 2015
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Nov 18th, 2015
Dec 6th, 2016
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