Kernen projected information

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Joe Kernen of CNBC recently commented that Amazon (AMZN) will start paying dividends in the medium term future because of all of the cash flow that it generates (coupled with a cash balance in excess of $43 billion). When pressed on the issue, Joe made a bold forecast that Amazon will start paying its first dividend 5 years from now in the amount of $93.00 per share. Joe also projected that the dividends would grow, over the following 5 years, by 14.00% per year, after which the growth rate would be a constant rate of 7.00%/year, forever. If the appropriate required return (also called discount rate, because we use it for discounting!) for AMZN's stock is 11.0%, what should today's stock price be if your calculation is to be based on Kernen's projected information?  

Reference no: EM132481160

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