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Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to
Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from today. The dividend should grow rapidly - at a rate of 31% per year - during Years 4 and 5; but after Year 5, growth should be a constant 4% per year. If the required return on Microtech is 16%, what is the value of the stock today? Round your answer to the nearest cent. Nonconstant growth Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from today. The dividend should grow rapidly - at a rate of 31% per year - during Years 4 and 5 ; but after Year 5 , growth should be a constant 4% per year. If the required return on Microtech is 16%, what is the value of the stock today? Round your answer to the nearest cent
Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings;
hence, it does not pay dividends. However, investors expect Microtech to begin paying
dividends, beginning with a dividend of $1.25 coming 3 years from today. The dividend should
grow rapidly - at a rate of 31% per year - during Years 4 and 5; but after Year 5, growth should
be a constant 4% per year. If the required return on Microtech is 16%, what is the value of the
stock today? Round your answer to the nearest cent.
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