A firm currently pays no dividend but is expected to pay a d…
A firm currently pays no dividend but is expected to pay a dividend at the end of Year 4. Year 4 earnings are expected to be $1.64, and the firm will maintain a payout ratio of 50%. Assuming a constant growth rate of 5% and a required rate of return of 10%, estimate the current value of this stock.
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Consider a stock with dividends that are expected to grow at 20% per year for four years, after which they are expected to grow at 5% per year, indefinitely. The last dividend paid was $1 .00, and ke = 10%. Calculate the value of this stock using the multistage growth model.
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