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Assume that the current dividend (D0) is $2, risk-free rate is 6%, market return is 12%, and firm's beta is 1.333. The firm's dividends are

Assume that the current dividend (D0) is $2, risk-free rate is 6%, market return is 12%, and firm's beta is 1.333. The firm's dividends are expected to follow the following growth pattern. Estimate the firm's current stock price (P0). You must show your calculations.

Dividend

YearGrowth Rate

1-225%

3-420%

5-615%

7 on9%

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