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  3. a company recently paid a dividend (do) of $2.25.

A company recently paid a dividend (DO) of $2.25. It expects to pay a dividend...

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Finance

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A company recently paid a dividend (DO) of $2.25. It expects to pay a dividend of $2.48 next year. The dividend should grow rapidly from there with growth in year 2 of 40%, growth in year 3 of 35%, growth in year 4 of 18%. The stock will then turn into a constant growth stock with a growth rate of 9% for all years after year 4. Stockholders' required return is 16.5%. Calculate P^0 and show all of your work to receive full credit for all steps including: the future expected dividend calculations, the discounting of those dividends back to the present value, the horizon / terminal value calculation, the discounting of the terminal value back to the present value, and the final sum of all the present values to arrive at P^0

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