Determine the price of NVDA common stock

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Question - Suppose that Nvidia Corporation (NVDA) is selling for $528.00. Analysts believe that the growth rate for NVDA will be 30% per year for the next three years, 15% per year for the following two years, and thereafter the growth rate will be 8% indefinitely. NVDA's most recent cash dividend per share was $8.00. The dividend will grow by the same rate as the company. Stockholders require a return of 18 percent on NVDA's common stock.

Required -

a) Based on the above assumptions, determine the price of NVDA's common stock.

b) Explain whether an investor should buy the stock.

Reference no: EM132945416

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