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The Birdstrom Co. just recently paid a dividend of $2.00 per share. Stock market analysts expect that the growth rate for the dividend will be
The Birdstrom Co. just recently paid a dividend of $2.00 per share. Stock market analysts expect that the growth rate for the dividend will be 40% in year 1, 30% in year 2, 20% in year 3, 15% in year 4, and 10% in year five. After the fifth year, the dividend will grow at a constant rate of 6%. If the required return for Birdstrom is 12%, calculate the current stock price and the expected dividend yield and capital gain in the first year if you buy the stock at the computed price
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