Solution-Estimated value per share of firm stock

Estimated value per share of firm stock

Reference no: EM132998817

Assume that the average firm in your company's industry is expected to grow at a constant rate of 6% and that its dividend yield is 8%. Your company is about as risky as the average firm in the industry and just paid a dividend (D0) of $2.5. You expect that the growth rate of dividends will be 50% during the first year (g0,1 = 50%) and and 25% during the second year (g1,2 = 25%). What is the required rate of return on your company's stock? What is the estimated value per share of your firm's stock?

Reference no: EM132998817

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Estimated value per share of firm stock

Reference no: EM132998817

Reference no: EM132998817

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