Question 7

A firm will issue a dividend of $2.4 the next year(D1=2.4), the dividend is expected to experience super growth for the next 2 years at 30%, then the firm is expected to resume normal growth of 5%. Suppose the cost of the firm is the 15%. What is the estimated price of the stock?

a. 21.56

b. 32.36

c. 25.98

d. 29.22

e. 24.35