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Ridgecrest . just paid a dividend of $2.00 to its shareholders. The firm is expecting high growth over the next few years and is projecting
Ridgecrest . just paid a dividend of $2.00 to its shareholders. The firm is expecting high growth over the next few years and is projecting the dividend to grow by 10% in the first year, 10% in the second year, and $12% in the third year, before slowing down to a constant 4% growth rate from that point forward. If the required return on the stock is 14%, answer the following questions:
(a) What is next years dividend amount? (b) What is the terminal or horizon value? and (c) What is the intrinsic value (price) of the stock today?
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