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Suppose Home Depot Inc. is going to pay the following dividends: $4 in year 1, $3.5 in year 2, $0.5 in year 3, $2.5 in
Suppose Home Depot Inc. is going to pay the following dividends: $4 in year 1, $3.5 in year 2, $0.5 in year 3, $2.5 in year 4, and $2 in year 5. After then (in other words, after year 5) the company will cease to operate and no more dividends will be paid. Based on the dividend discount model, if the equity cost of capital on this company is 11.00%, what is its current stock price?
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$17.58
$12.50
$1.19
$9.64
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