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A fast growing firm just paid a dividend of $0.60 per share. The dividend is expected to increase at a constant rate for the next
A fast growing firm just paid a dividend of $0.60 per share. The dividend is expected to increase at a constant rate for the next three years, leading to a dividend payment of $0.735 at the end of year 3. This dividend growth rate will then fall to 4 percent perpetually. You assume a 12 percent discount rate is appropriate for this stock.
What is the stock price at year 3? (Give your answer to 4 decimal places, no dollar sign required.)
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