Dividends and costs of common equity

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Reference no: EM13971524

Suppose Dysfunctional Inc. has the following (variable) dividends and costs of common equity for the next five years.

t	D(t)	kcs
1	6.65	15%
2	3.37	8%
3	2.37	7%
4	8.12	6%
5+	7.56	5%

Note that the dividends past year 5 will grow at a fixed, annual rate of 1% and the costs of common equity will remained fixed at an annual rate of 4%. What should the price of this stock be?

Reference no: EM13971524

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