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Thirsty Cactus Corp just paid a dividend of $1.40 per share. Dividends expected to grow at 25% for the next 7 years and then level
Thirsty Cactus Corp just paid a dividend of $1.40 per share. Dividends expected to grow at 25% for the next 7 years and then level off to a 6 percent growth rate indefinitely.
If the required return is 15%, what is the price of the stock today?
I know that D7 is 11.44, and D8 is 12.13. I know I am supposed to do this formula next:
D8/required rate-growth rate, however I am getting 80.65 as an answer when that is incorrect.
Please explain what I am doing wrong/what to do in simple terms.
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