It does not pay dividends

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Reference no: EM13917520

Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings, hence it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.00 coming 3 years from today. The dividend should grow 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? Round your answer to two decimal places. Comment

Reference no: EM13917520

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