Growing, Inc. is a firm that is experiencing rapid growth. The firm yesterday paid a dividend of $7.50. You believe that dividends will grow at a rate of 24.0% per year for two years, and then at a rate of 5.0% per year thereafter. You expect the stock will sell for $46.57 in two years. You expect an annual rate of return of 18.0% on this investment. If you plan to hold the stock indefinitely, what is the most you would pay for the stock now?

Step 1:

D1 = 7.50(1+24%)=9.30

D2=9.30(1+24%=11.532

Step 2:

P2=11.532(1+5%)/(18%-5%)=93.1431

Step3:

=?

Correct Answer = $83.06

Solve using Excel. Please show your work.