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A company. StarMoon Pte. Ltd.. has recently paid dividends of $2 per share. According to stock analysts, the dividend is expected to grow at a
A company. StarMoon Pte. Ltd.. has recently paid dividends of $2 per share. According to stock analysts, the dividend is expected to grow at a constant rate of 4% for the next 5 years. After that, the dividend is expected to grow at the lower rate of 2% annually. Assume that the risk-free rate is 1.5%. the beta of the stock is 1.5 and the expected market return is 3%. Calculate the value of StarMoon's stock per share. If dividend is expected to be held constant after year 5 instead, re-calculate the value of StarMoon's stock per share. Assume that it is currently 1 Jan and dividends are paid out at the end of each year in your answer. Show your workings clearly with calculations performed on Excel
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