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Better Mousetraps has come out with an improved product, and the world is beating a path to its door. As a result, the firm projects
Better Mousetraps has come out with an improved product, and the world is beating a path to its door. As a result, the firm projects growth of 15% per year for 3 years. By then, other firms will have copycat technology, competition will drive down profit margins, and the sustainable growth rate will fall to 5%. The most recent annual dividend was DV 0= $1 per share and the discount rate is 10%.
1. What are the estimated amount of dividend payments in year 1, 2 and 3
2. what is the estimated stock price in year 3
3. Calculate P0 (today's price)
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