A firm just paid a $2 per share dividend, and the stock currently sells for $40 per share. Dividends are expected to grow at a 10% annual rate for…
1. A firm just paid a $2 per share dividend, and the stock currently sells for $40 per share. Dividends are expected to grow at a 10% annual rate for the next five years. What price must you be able to sell the stock for at the end of the 5 years in order for the stock to be fairly valued based on a 15% cost of equity?
