Find the current stock prices: Part A : Constant growth dividend: A company is expected...
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Find the current stock prices:
Part A : Constant growth dividend: A company is expected to pay a dividend of $2 next year (D1 = $2). It has a constant growth rate of 6% and a cost of stock of 12%. What is the companys current stock price?
Part B : Non-constant growth dividends: Current dividend = D0 = $3. The growth rate = 20% for Year 0 to Year 1, 15% for Year 1 to Year 2, 10% for Year 2 to Year 3, and then long-run constant gL = 6%. Cost of stock = 15%. What is the current stock price?
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