A firm has just paid (the moment before the evaluation) a dividend of 55c and is expected to exhibit a growth rate of 10% into the indefinite future, the appropriate discount rate is 14%. a) What is the value of the stock?

The analyst who supplied you with the information above has just revised her forecast. She now realizes that the growth rate of 10% can continue only for five years, after which the company will have a long-term growth rate of 6%. Furthermore, at the end of five years, she expects the company's payout rate to increase from its present 30% up to 50%.

b) what value would you assign the company?