Question
A company currently pays a dividend of $3per share (D 0 = $3). It is estimated that the company's dividend will grow at a rate
A company currently pays a dividend of $3per share (D0 = $3). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, and then at a constant rate of 5% thereafter. The company's stock has a beta of 1.8, the risk-free rate is 9%, and the market risk premium is 4.5%. What is your estimate of the stock's current price?
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Financial & Managerial Accounting
Authors: Jan Williams, Sue Haka, Mark Bettner, Joseph Carcello
15th Edition
0073526991, 9780073526997
