Question
the company Emirsoft is currently in the phase of rapid sales growth. the company just paid a dividend on its stock of $2 per share.
the company Emirsoft is currently in the phase of rapid sales growth. the company just paid a dividend on its stock of $2 per share. For the next three years 1, 2,3 only. the paid-out dividend is expected to grow by 20% for each year. As of the beginning of year 4, the company is expected to stabilize its position in the market and its growth of sales. As a result, starting from year 4, the dividend is expected to grow by 5% annually for the foreseeable future. Currently, the market requires a rate of return of 12% for stocks with similar risk characteristics 1. Calculate the share price of the EmirSoft stock today using the supernormal growth valuation method 2. For its initial establishment, the owners of EmirSoft contributed $40,000 in startup capital, allocated in 1,000 shares. Based on your estimation of the market price of the EmirSoft share of stock (under question 1). Comment on whether the investment has so far been worthwhile undertaking or not
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