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Price the Stock P 0 P 3 and P 8 for each of the three streams of dividend payouts, discount rate is 10% Year Dividend
Price the Stock P0 P3 and P8 for each of the three streams of dividend payouts, discount rate is 10%
Year | Dividend S1 | Dividend S2 | Dividend S3 |
1 | $1 | $2 | $3 |
2 | $1 | $5 | $3 |
3 | $3 | $8 | $3 |
4 | $3 | $10 | 10% growth rate |
5 | $3 | $15 | 10% growth rate |
6 | $3 | 10% growth rate | 20% growth rate |
7 | $3 | 20% growth rate | |
8 | $3 |
| 5% growth afterwards |
9 | $3 (no growth) |
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P0 |
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P3 |
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P8 |
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