Suppose that Chipotle Mexican Grill, Inc.s stock is selling for $2060.00. Analysts believe that the growth rate for Chipotle will be 25% next year, 30% for the following 2 years, 20% for the following three years, and thereafter the growth rate will be 7% indefinitely. Due to its growth, Chipotle will not pay a cash dividend until four years from now. At the time the dividend will be $4.00. Thereafter the dividend will grow by the same rate as the company. Stockholders require a return of 20 percent on Chipotles stock.

Required:

1. Based on the above assumptions, determine the price of Chipotles common stock.
2. Explain whether or not an investor should buy the stock.