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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 Summary

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

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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 ...

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