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Motorola's earning and dividends will grow at 0.5% monthly during the next five years. Its growth will stop after year 5. In year 6 and afterward, it will pay out all earning as dividends. Assume next year's EPS is $10 and the dividend is $5 and the market capitalization rate is 9%

What is Motorola's stock price?

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Solution Summary

The stock price is determined.

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g1 = 0.5%
n1 = 5
next year,
EPS1 = 10
D1 = 5
rate = 9%
We can compute the following present value table:
note: PV = Dividend / ...

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