7) A company is expected to experience growth in three stages in the future. Most...
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7) A company is expected to experience growth in three stages in the future. Most recent dividend is 0.90 USD per share. Following information has been given:
High Growth period
Duration : 3 years
Dividend growth rate : 30%
Shareholders required return : 20%
Transition period
Duration : 3 years
Dividend growth rate : 9% (for transition period only)
Shareholders required return : 20%
Constant growth period
Dividend growth rate : 3%
Shareholders required return : 10%
What is the present value of equity? (10 Points)
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