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(b) Jorgensen and Krugman, Inc. is a young start-up company. The company will not pay dividends in early operation. 12 years from now, because the
(b) Jorgensen and Krugman, Inc. is a young start-up company. The company will not pay dividends in early operation. 12 years from now, because the firm needs to plow back its earnings to fuel growth, the firm expects to pay $4 per share. Subsequently, the company is expected to pay a dividend of $4 per share every year thereafter. If the required rate of return on the stock is 15%, what is the current price of the stock?
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