Estimate the current stock price given expected dividend gro
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A company currently pays dividend of $2 per share, Do=$2. It is estimated that the company's dividend will grow at rate of 20% per year for the next 2 years; then the dividend will grow at a constant rate of 7% thereafter. The company's stock has a beta equal 1.2, the risk-free is 7.5%, and the market premium is 4%.
What is your estimate of the stock's current price?
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Solution Summary
Attached is the solution with step by step calculation.
Education
- Chartered Accountant (Equivalent to CPA in US), Institute of Charted Accountants of India
- Bachelor of Commerce, West Bengal University
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