13. Sometimes you have supernormal growth and later you have a constant growth rate. What is the price of common stock today if have a growth rate of 20% for the next 3 years, and a 6% constant growth rate afterwards? You dividend today is $1.00. Your r

Can you please look at my question number 13? My teacher says that it is wrong,

1 All common stockholders generally have voting rights. But this is not always valid. A company may divide common stock in stock with voting 2 Preemptive right allow shareholders to purchase the additional shares issued by the company in accordance with their existing shareholding before they are offered to general public. 3 Formula for the valuation of constant growth stock is: Value of stock = D1 / k - g Where, D1 = Dividend next Year k = Cost of capital or required rate of return g = Dividend growth rate 4 k (Cost of capital or required rate of return) has to be greater in the denominator. 5 Price of common stock : D1 = 23 x 1.04 = $23.92 Price of the Stock = 23.92 / 0.13 - 0.04 = $265.78 6 Required Rate of Return according to CAPM = Risk free Rate + Beta (Market Rate of Return - Risk Free Rate) 7 Required rate of Return = 5 + 1.3 (10 - 5) = 11.50% 8 Cost of Equity according to constant growth model = (Next Year Dividend / Current Stock Price) + Dividend Growth Rate 9 Non growth means there is no growth in the payment of dividend and dividend will be constant every year. 10 Formula for Zero growth stock: Price = Dividend / Rquired return 11 Calculation of Price of the stock: Price = 20 / 0.10 = $200 12 Formula for capital gain yield = Price at the end of Year - Initial Stock Price / Initial Stock Price 13 Calculation of Price of Stock: Year Dividend 1 2 3 4 1.2 1.44 1.728 1.83168 Price at the end of Year 3 = 1.83168 / 0.10 - 0.06 = $45.79 Price at Present: 45.79 / (1 + 0.10)^3 = $34.40 14 Formula for valuation of Preferred stock = Dividend / required return 15 Value of Preferred Stock = 10 / 0.10 = $100 16 Three form of EMH: a Weak form: This form of EMH shows that the market is efficient and it reflect all information related with market. b Semi Strong form of EMH shows that the market is efficient and the prices shows all publicly available informations. c Strong form of EMH shows that the market is efficient and the prices reflects all public and private informations. h voting rights and stock without voting right. eholding