Computech Corporation is expanding rapidly and currently needs to retain all of its earnings hence, it does not pay dividends However, investors expect Computech to begin paying dividends, beginning with a dividend of $1 00 coming 3 years from today The dividend should grow rapidly at a rate of 45 per year during Years 4 and 5 but after Year 5, growth should be a constant 7 per year If the required return on Computech is 14 , what is the value of the stock today Do not round intermediate calculations Round your answer to the nearest cent Computech Corporation is expanding rapidly and currently needs to retain all of its earnings hence, it does not pay dividends However, investors expect Computech to begin paying dividends, beginning with a dividend of $1 00 coming 3 years from today The dividend should grow rapidly at a rate of 45 per year during Years 4 and 5 but after Year 5, growth should be a constant 7 per year If the required return on Computech is 14 , what is the value of the stock today Do not round intermediate calculations Round your answer to the nearest cent $

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Oct 06, 2024

Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to

Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.00 coming 3 years from today. The dividend should grow rapidly-at a rate of 45% per year-during Years 4 and 5; but after Year 5, growth should be a constant 7% per year. If the required return on Computech is 14%, what is the value of the stock today? Do not round intermediate calculations. Round your answer to the nearest cent.

image text in transcribed