Question
Hope Industries just paid a dividend of $2.00 per share (i.e., D0 = $2.00). Analysts expect the company's dividend to grow 40 percent this year,
Hope Industries just paid a dividend of $2.00 per share (i.e., D0 = $2.00). Analysts expect the company's dividend to grow 40 percent this year, and 20 percent in second year. After two years the dividend is expected to grow at a constant rate of 6 percent. The risk free rate is 4% and expected market risk premium is 6% and the firm is twice as risky as market. First calculate the current stock price using Excel. If the target price of the company's stock is $80.00, what should be the expected stable constant growth rate after two years? You must use Goal Seek command in Excel and show me the screen shot.
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