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BootStrap Beverages Inc. currently (2020) does not pay a dividend. However, the company is expected to pay a $1.00 dividend two years from today (2022).
BootStrap Beverages Inc. currently (2020) does not pay a dividend. However, the company is expected to pay a $1.00 dividend two years from today (2022). The dividend is then expected to grow at a rate of 20 percent a year for the following three years. After the dividend is paid in 2025, it is expected to grow forever at a constant rate of 7 percent. Currently, the risk-free rate is 6 percent, market risk premium (rM rRF) is 5 percent, and the stocks beta is 1.4. What should be the price of the stock today?
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