Question
Your cousin just got an offer from a start up, she will receive LE 2000 per month and the other part of her compensation is
Your cousin just got an offer from a start up, she will receive LE 2000 per month and the other part of her compensation is in the form of a stock grant of 500 shares of the companys stock. Unfortunately the company is not publicly traded, so she cannot look up the value of this stock grant, but she heard that you are taking FINC 303 , so she asked you to value the stock using the multiple growth model. The stock will pay a dividend today 0.90 per share. She expects that the dividend will grow at 20% per year for the next 3 years as the company is expected to grow at a very high rate. But after 3 years of explosive growth, the companys growth will slow and the dividend will only grow by 6% per year into perpetuity (starting in year 4).The discount rate for the companys stock is 10%.How much is the value of the compensation that your cousin will receive? Should she choose this job or another job that offers her LE 4500 monthly?
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