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The last dividend paid by Gizmo was $2.00. Dividends are expected to increase at 50% a year for two years, then decrease at 10% a
The last dividend paid by Gizmo was $2.00. Dividends are expected to increase at 50% a year for two years, then decrease at 10% a year for two years, and then increase at a steady rate of 5% thereafter. The stock's beta is 1.2. Risk free rate is 5% and the return on the market is 10%.
Calculate the expected dividend D1, one year from now, dividend D2, two year from now, and dividend D3, three year from now.
Calculate the horizon value.
Calculate the price today.
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