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    Chartreuse County Choppers Inc.: Two-Stage Dividend Growth

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    Chartreuse County Choppers Inc. is experiencing rapid growth. The company expects dividends to grow at 25% per year for the next 9 years before leveling off at 6% into perpetuity. The required return on the company's stock is 12%. If the dividend per share just paid was $1.05, what is the stock price?

    © BrainMass Inc. brainmass.com October 9, 2019, 9:04 pm ad1c9bdddf
    https://brainmass.com/business/accounting-for-corporations/chartreuse-county-choppers-inc-two-stage-dividend-growth-172036

    Solution Preview

    The stock price is the present value of all dividends. Since the dividends are growing at 25% for 9 years and then have a constant growth rate, we need to calculate the dividends for each of the first nine years. From year 10, the growth ...

    Solution Summary

    The expert examines the two-stage dividend growth for Chartreuse County Choppers Inc.

    $2.19