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Imaginary Inc. paid a dividend of $2 per share in the past year. The dividend will grow at 50% and 25% rate for year 1
Imaginary Inc. paid a dividend of $2 per share in the past year. The dividend will grow at 50% and 25% rate for year 1 and year 2, respectively. Starting from year 3, the dividend growth rate will be 10% and remain at that level for perpetuity. The required rate of return for the stock is 15%. What are the expected dividends for year 1, year 2, and year 3? What should be the stock price today according to the two-stage dividend discount model
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