Non constant growth valuation

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Non constant Growth Valuation

A company currently pays a dividend of $2.25 per share (D₀ = $2.25). It is estimated that the company's dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 6% thereafter. The company's stock has a beta of 1.5, the risk-free rate is 4.5%, and the market risk premium is 6%. What is your estimate of the stock's current price? Round your answer to the nearest cent.

Reference no: EM13807467

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