Determine the theoretical value of ge stock

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Problem - Suppose you wish to determine the theoretical value of GE stock currently paying an annual dividend of $0.92. You anticipate the dividend will grow in the following pattern: 10% for the next 5 years, then 12% for 5 years, next 14% for 3 years and finally settling down to an annual growth rate of 4% for the duration of the life of the stock. A 10% rate of return is demanded for the investment in this stock. The stock price was $30.60 on June 18, 2016. What is your recommendation?

Reference no: EM131192149

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