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Problem 18-17 The Duo Growth Company just paid a dividend of $3.00 per share. The dividend is expected to grow at a rate of 15%
Problem 18-17 The Duo Growth Company just paid a dividend of $3.00 per share. The dividend is expected to grow at a rate of 15% per year for the next three years and then to level off to 9% per year forever. You think the appropriate market capitalization rate is 30% per year. a. What is your estimate of the intrinsic value of a share of the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Intrinsic value per share b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Expected dividend yield c. What do you expect its price to be one year from now? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected price
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