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Hello can anyone help with this? Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay
Hello can anyone help with this?
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 $0.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 16% per year - during Years 4 3. Stock valuation and 5 ; but after Year 5 , growth should be a constant 9% per year. Calculate the stock price P0. Nonconstant growth \begin{tabular}{lr} Year 3 Dividend, D3 & $0.50 \\ \hline Supernormal growth rate, gs & 16.00% \\ \hline Normal growth rate, gn & 9.00% \\ Required return, rs & 12.00% \end{tabular} Stock Price, P0 using NPVStep by Step Solution
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