Question
Primanti Brothers last dividend was $4.00. The dividend growth rate is expected to be constant at 10% for 3 years, after which dividends are expected
Primanti Brothers last dividend was $4.00. The dividend growth rate is expected to be constant at 10% for 3 years, after which dividends are expected to grow at a rate of 2.5% forever. Note that market interest rates change all the time! So, we are going to push the limits of our understanding of this problem (and hints will be forthcoming in our M/W Zoom sessions!). Suppose rs is currently 2% and will remain that way for 3 years. But, we expect this rate to increase to 5% in year 3 and remain at that rate indefinitely. What is the firms current (expected) stock price? [Note: A timeline will be very helpful here!]
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