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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 20% per year for 4 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 DIV0 =$1 per share. a) What are the expected values of: (i) DIV1, (ii) DIV2, (iii) DIV3, and (iv) DIV4? b) What is the expected stock price 4 years from now? The discount rate is 10%. c) What is the stock price today
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