Hernandez Products is a rapidly growing firm. Dividends are expected to grow at the rate of 18

Question:

Hernandez Products is a rapidly growing firm. Dividends are expected to grow at the rate of 18 percent annually for the next 10 years. The growth rate after the first 10 years is expected to be 7 percent annually. The current dividend is $1.82. Investors require a rate of return of 19 percent on this stock. Calculate the intrinsic value of this stock.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...