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    Stock Value

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    How can I calculate the value of the stock, based on the info below.

    D1 = $0.90
    Growth rate for 7 years at 19%
    Long-term stable growth rate of 7%
    Required return on stock = 15%.

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    Solution Preview

    The value of the stock is the present value of all the dividends. Here since the growth rate is different for 2 periods, we will have to use the 2 stage model. In this we find the PV of dividends for 7 years when they are growing at 19% and then the PV of ...

    Solution Summary

    The solution explains how to calculate stock value using dividend discount model.