Dividend Initiation and Stock Value A firm does not pay a dividend. It is expected to pay its first dividend of $0.22 per share in two years. This dividend will grow at 11 percent indefinitely. Using a 13 percent discount rate, compute the current value of this stock.

Changes in Growth and Stock Valuation Consider a firm that had been priced using a 10.00 percent growth rate and a 15.00 percent required rate. The firm recently paid a $1.30 dividend. The firm has just announced that because of a new joint venture, it will likely grow at a 12.00 percent rate. How much should the stock price change (in dollars and percentage)?

Changes in Growth and Stock Valuation Consider a firm that had been priced using a 10 percent growth rate and a 13 percent required rate. The firm recently paid a $2.30 dividend. The firm has just announced that because of a new joint venture, it will likely grow at a 12 percent rate. How much should the stock price change (in dollars and percentage)?