A fast-growing firm recently paid a dividend of $0.70 per share. The dividend is expected to increase at a 25 percent rate for the next four years. Afterwards, a more stable 13 percent growth rate can be assumed. If a 14.5 percent discount rate is appropriate for this stock, what is its value? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
A fast-growing firm recently paid a dividend of $0.70 per share. The dividend is expected to increase at a 25 percent rate for the next four years. Afterwards, a more stable 13 percent growth rate can be assumed. If a 14.5 percent discount rate is appropriate for this stock, what is its value? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
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
Problem 1PS
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Transcribed Image Text:A fast -growing firm recently paid a dividend of $0.70 per share. The dividend is expected to increase at a 25
percent rate for the next four years. Afterwards, a more stable 13 percent growth rate can be assumed. If a 14.5
percent discount rate is appropriate for this stock, what is its value? (Do not round intermediate calculations and
round your final answer to 2 decimal places.)
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