Storico Co just paid a dividend of $2 45 per share The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a con...

Here we have a stock with supernormal growth but the dividend ...

Storico Co. just paid a dividend of $2.45 per share. The company will increase its dividend by

Question:

Storico Co. just paid a of $2.45 per share. The company will increase its by 20 percent next year and will then reduce its growth rate by 5 percentage points per year until it reaches the industry average of 5 percent growth, after which the company will keep a constant growth rate forever. If the required return on Storico stock is 11 percent, what will a share of stock sell for today?
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...