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A firm has a current dividend of $8 per share, and the dividend is expected to grow at 24% for the next five years, after
A firm has a current dividend of $8 per share, and the dividend is expected to grow at 24% for the next five years, after which the growth rate will slow to 8% per year. If the price of stock is $300, what is the cost of equity based in the dividend model of stock price? Hint: first understand that the share value is the sum of the PV ( dividends from the first five years) and PV ( dividends for 6 years to eternity).
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