Question
Can you please provide a written explanation and show all the steps without using Excel. - Durmush Technologies was founded 8 years ago in NIGDE.
Can you please provide a written explanation and show all the steps without using Excel.
- Durmush Technologies was founded 8 years ago in NIGDE. It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated that it plans to pay a $0.25 dividend 3 years from today, then to increase it at a relatively rapid rate for 2 years, and then to increase it at a constant rate of 8.00% thereafter. Management's forecast of the future dividend stream, along with the forecasted growth rates, is shown below. Assuming a required return of 11.00%, what is your estimate of the stock's current value?
| Year | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| Growth rate | NA | NA | NA | NA | 30.00% | 15.00% | 8.00% |
| Dividends | $0.000 | $0.000 | $0.000 | $0.250 | $0.325 | $0.374 | $0.404 |
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Finance And Economics Discussion Series Measurement Error And Time Aggregation A Closer Look At Estimates Of Output Labor Elasticities
Authors: United States Federal Reserve Board, Marcello Estevao
1st Edition
1288722990, 9781288722990
