1. A firm is expected to have a high growth rate in the next 2 years and a stable growth rate of 6% forever after that. Use the following information to find the stock value.

I am getting $70.07 as the answer and want to double check. Thank you!

1. A firm is expected to have a high growth rate in the next 2 years and a stable growth rate of 6% forever after that. Use the following information to find stock value. Inputs for the high growth period: be lou Current earnings per shar (EPS) = $4.00 Current dividend per share (DPS) = $1.00 Length of the high-growth period = 2 years Long-term bond rate (proxy for the risk-free rate) = 5% Market risk premium = 6% Beta of the stock for the high-growth period = 1.6 Return on assets (ROA) during the high growth period = 20% Debt to equity ratio during the high growth period = 0.70 Before-tax interest rate on debt for the high growth period = 7% Tax rate during the high growth period -25% a=25 b-.75 RE=,05 P=.06 Cost of hanit 14.6% 00 by, Inputs for the stable growth period: High = 750.2+.7.2-07(1-25) Bl.2t. 10325) 75 1.203,25) Stable growth rate forever = 6% Beta of the stock for the stable growth period = 1.1 High = 2270 Long-term bond rate (proxy for the risk free rate) = 5% Market risk premium = 6%. Return on assets (ROA) during the stable growth period = 0.18 Debt to equity ratio during the stable growth period = 0.70 Before-tax interest rate on debt for the stable growth period = 6% Tax rate during the stable growth period -25% Assume that the dividend payout ratio remains constant at the current level for the first two years. .06 -b 18+1.7(.18-06(1-250) = 218579235 d=78142 /