Beachmaster Suntan Oil’s dividend is expected to grow at a 20% rate each of the next...

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Beachmaster Suntan Oil’s dividend is expected to grow at a 20%rate each of the next 2 years. After that, dividend growth isexpected to normalize at about 6.5% annually. Beachmaster just paida $1.25 annual dividend per share. The require rate of the returnof the stock is 12%. What is your estimated stock price today?

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Step1 Dividend for the next 2 years Dividend in Year 1 D1 150 per share 125 x 120 Dividend in Year 2 D2 180 per share 150 x 120 Step2 The Price of the stock in year 2 P2    See Answer
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Beachmaster Suntan Oil’s dividend is expected to grow at a 20%rate each of the next 2 years. After that, dividend growth isexpected to normalize at about 6.5% annually. Beachmaster just paida $1.25 annual dividend per share. The require rate of the returnof the stock is 12%. What is your estimated stock price today?

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