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

Anonymous
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 your Firm's stock?

anusha_reddy
School: Carnegie Mellon University

 9 Rerured rate of return Ke 7% Constant Growth rate g 6% Last Divided D0 1 Year 1 Year 2 Dividend 1.5 1.875 Value of future dividends Using formula P0 = D1/Ke-g \$ 198.75 D1 = 1.875*106% Total 1.5 200.625 Present value factor (7%) 0.934579 0.873439 Present value \$  1.40 \$ 175.23 Total present value \$ 176.64

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Review

Anonymous
Excellent job

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