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The Ramirez Company's last dividend was $1.75. Its dividend growth rate is expected to be constant...

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Finance

The Ramirez Company's last dividend was $1.75. Its dividendgrowth rate is expected to be constant at 24% for 2 years, afterwhich dividends are expected to grow at a rate of 6% forever. Itsrequired return (r) is 12%. What is the best estimate of thecurrent stock price?

$42.48

$41.98

$43.11

$41.82

Answer & Explanation Solved by verified expert
4.1 Ratings (585 Votes)
Dividend for year 1 1751024 21700Dividend for year 2 2171 024    See Answer
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Transcribed Image Text

The Ramirez Company's last dividend was $1.75. Its dividendgrowth rate is expected to be constant at 24% for 2 years, afterwhich dividends are expected to grow at a rate of 6% forever. Itsrequired return (r) is 12%. What is the best estimate of thecurrent stock price?$42.48$41.98$43.11$41.82

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