Calculate the present value of the company stock

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Reference no: EM131908818

A company due to its technology development expects to have 15% annual growth rate for the next 5 years, thereafter as other firms would have comparable technology, its growth is expected to slow down to 5% per year indefinitely. Stockholders required rate of return is 12% on company’s stock. The most recent annual dividend paid yesterday was $1 per share.

Calculate the present value of the company’s stock and the expected a) dividend yield, b) capital gain yield, and c) total return during

i. current year and

ii. 5 years there after

Reference no: EM131908818

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