Explain differential dividend growth model

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Differential Dividend Growth Model

Combined Communications is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 22 percent a year for the next 4 years and then decreasing the growth rate to 6 percent per year. The company just paid its annual dividend in the amount of $1.30 per share. What is the current value of one share of this stock if the required rate of return is 9.00 percent?

$79.03

$64.84

$72.62

$69.10

$78.72

Reference no: EM1346580

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