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