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Assume that the average firm in your company's industry has a required rate of return of 13%. Your company is about as risky as the
Assume that the average firm in your company's industry has a required rate of return of 13%. Your company is about as risky as the average firm in the industry, but it has just successfully completed some R&D work that leads you to expect that its earnings and dividends will grow at a rate of 50% this year and 25% the following year, after which growth should match the 6% industry average growth rate. If the last dividend paid was $2, what is the fair of your firm's stock at time 0?
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