2) The Duo Growth Company just paid a dividend of $1 per share. The dividend is expected to grow at a rate of 25% per year for the next 3 years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 20% per year. What is your estimate of the intrinsic value ofa share of the stock?
2) The Duo Growth Company just paid a dividend of $1 per share. The dividend is expected to grow at a rate of 25% per year for the next 3 years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 20% per year. What is your estimate of the intrinsic value ofa share of the stock?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:2) The Duo Growth Company just paid a dividend of $1 per share. The dividend is expected
to grow at a rate of 25% per year for the next 3 years and then to level off to 5% per year
forever. You think the appropriate market capitalization rate is 20% per year. What is your
estimate of the intrinsic value ofa share of the stock?
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