R. E. Lee recently took his company public through an initial public offering. He is Growth for his company is expected to be 40 percent for the first three years and then he expanding the business quickly to take advantage of an otherwise unexploited market. Investors require a 17 percent return on Lee's stock. What is the current price of Lee's stock? Compute Year 1 - 4 Dividends: Po = .75 - 1.05 D = 0.75 (1.90) 1 = D = 0,751.40) = 1.47 2 P = 0.75 (1.70) 3 = 2.0548 CF = 6 Coi = 105 G2 = 1.47 Co 3 = 2.0598 +118.335 NPV D = 0.75 (1,90) (1.15)'= 2.3667 0 1.05 ily = 17 cet+ Pr=77,1 2 3 2.0648 2.3661 P = D r-g + 1.47 Compute the expected future price of the stock at year 3: 71 2.3667 7.IS.) 118.335 Find the Present Value of the expected future cash flows: