Suppose that Zoom Video Communications, Inc. (ZM) is selling for $75.00. Analysts believe that the growth rate for ZM will be 40% per year for the next three years, 25% per year for the following two years, and thereafter the growth rate will be 10% indefinitely. ZMs most recent cash dividend per share was $2.00. The dividend will grow by the same rate as the company. Stockholders require a return of 18 percent on ZMs common stock.

Required:

Based on the above assumptions, determine the price of ZMs common stock.

Explain whether an investor should buy the stock.