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The Duo Growth Company just paid a dividend of $3.4 per share. The dividend is expected to grow at a rate of 25% per year
The Duo Growth Company just paid a dividend of $3.4 per share. The dividend is expected to grow at a rate of 25% per year for the next 3 years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 18% per year. What is your estimate of the intrinsic value of a share of the stock? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? (Round your answer to 1 decimal place. Omit the "%" sign in your response.) What do you expect its price to be 1 year from now? What is the implied capital gain? (Round your answers to 2 decimal places. Omit the "$" & "%" signs in your response.) Is the implied capital gain consistent with your estimate of the dividend yield and the market capitalization rate? Yes No
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