Investors expect microtech to begin paying dividend begining

Reference no: EM131135949

Problem 9-16: Microtech Corporation is expanind rapidly and currenly needs to retain all of its earnings, hence it does not pay dividends. However, investors expect Microtech to begin paying dividend begining with a dividend of $1.00 coming 3 years from today. The dividend sholdgrow rapidly at a rate of 50% per year - during years 4 and 5; but after year 5, growth should be a constant 8% per year. If the required return on Microtech is 15%, what is the value of the stock today?

Reference no: EM131135949

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