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14 ( Nonconstant Growth) Computech Corporation is expanding rapidly and currently needs to retain all its earnings; hence it does not pay dividends. However, investors
14 (Nonconstant Growth) Computech Corporation is expanding rapidly and currently needs to retain all its earnings; hence it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $0.50 coming 3 years from today. The dividend should grow rapidlyat the rate of 35% per yearduring Years 4 and 5, but after Year 5, growth should be a constant 7% per year. If the required return on Computech is 13%, what is the value of the stock today?
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