TelTec Inc has a patent that will expire in two years The firm is expected to grow at 10 percent for the next two years and dividends will be paid at year end It just paid a dividend of $1 00 After two years, the growth rate will decline to 4 percent immediately, and the firm will grow at this rate...

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TelTec Inc. has a patent that will expire in two years. The firm is expected to grow

Question:

TelTec Inc. has a patent that will expire in two years. The firm is expected to grow at 10 percent for the next two years and dividends will be paid at year end. It just paid a of $1.00. After two years, the growth rate will decline to 4 percent immediately, and the firm will grow at this rate forever. If the required rate of return is 11 percent, value the firm’s current share price.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...