Nonconstant Growth Valuation

A company currently pays a dividend of $1.25 per share (D0 = $1.25). It is estimated that the company's dividend will grow at a rate of 17% per year for the next 2 years, then at a constant rate of 5% thereafter. The company's stock has a beta of 1.7, the risk-free rate is 5%, and the market risk premium is 5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent. (THE ANSWER IS NOT $16.44)

Horizon Value of Free Cash Flows

Current and projected free cash flows for Radell Global Operations are shown below.

	Actual 2016	2017	Projected 2018	2019
Free cash flow	$606.64	$667.32	$707.37	$756.89
(millions of dollars)

Growth is expected to be constant after 2018, and the weighted average cost of capital is 11.3%. What is the horizon (continuing) value at 2019 if growth from 2018 remains constant? Round your answer to the nearest dollar. Round intermediate calculations to two decimal places.