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Carnes Cosmetics Co.'s stock price is $60, and it recently paid a $3.00 dividend. This dividend...

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Finance

Carnes Cosmetics Co.'s stock price is $60, and it recently paida $3.00 dividend. This dividend is expected to grow by 21% for thenext 3 years, then grow forever at a constant rate, g; and rs =15%. At what constant rate is the stock expected to grow after Year3? Do not round intermediate calculations. Round your answer to twodecimal places.

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4.5 Ratings (872 Votes)
D0 3 D1 D0 x 1g 3 x 121 363 D2 D1 x 1g 363 x 121 43923 D3 D2 x 1g 43923 x 121 5314683 D4 D3 x 1g 5314683 x 1g Price of share in year 3 P3 can be computed using dividend discount model as P3    See Answer
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Carnes Cosmetics Co.'s stock price is $60, and it recently paida $3.00 dividend. This dividend is expected to grow by 21% for thenext 3 years, then grow forever at a constant rate, g; and rs =15%. At what constant rate is the stock expected to grow after Year3? Do not round intermediate calculations. Round your answer to twodecimal places.

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