Nonconstant Growth Stock Valuation Simpkins Corporation does not pay any dividends because it is expanding rapidly and...

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Nonconstant Growth Stock Valuation
Simpkins Corporation does not pay any dividends because it isexpanding rapidly and needs to retain all of its earnings. However,investors expect Simpkins to begin paying dividends, with the firstdividend of $1.50 coming 3 years from today. The dividend shouldgrow rapidly - at a rate of 60% per year - during Years 4 and 5.After Year 5, the company should grow at a constant rate of 6% peryear. If the required return on the stock is 13%, what is the valueof the stock today (assume the market is in equilibrium with therequired return equal to the expected return)? Round your answer tothe nearest cent. Do not round your intermediate computations.

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Nonconstant Growth Stock ValuationSimpkins Corporation does not pay any dividends because it isexpanding rapidly and needs to retain all of its earnings. However,investors expect Simpkins to begin paying dividends, with the firstdividend of $1.50 coming 3 years from today. The dividend shouldgrow rapidly - at a rate of 60% per year - during Years 4 and 5.After Year 5, the company should grow at a constant rate of 6% peryear. If the required return on the stock is 13%, what is the valueof the stock today (assume the market is in equilibrium with therequired return equal to the expected return)? Round your answer tothe nearest cent. Do not round your intermediate computations.