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Vega Motor Corporation has just paid a dividend of $1.00. Analysts are predicting that the company will increase its dividend by 12 percent next year
Vega Motor Corporation has just paid a dividend of $1.00. Analysts are predicting that the company will increase its dividend by 12 percent next year and then will reduce the dividend growth rate by 3 percentage points per year until it reaches the industry average of 3 percent, after which the dividend will increase at the 3 percent constant growth rate annually, forever. If Vega Motors equity cost of capital is 7.5%, at what price does the dividend-discount model predict Vega Motors stock should sell now?
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